If you worked in any of these countries, you could be due a Tax Refund

Your No-Nonsense Guide to PAYE Taxes in Ireland

We've broken down the basics in our jargon-free guide so you can get the lowdown on the PAYE tax system in a language you'll understand!

This guide has been updated following the Budget 2019 announcement 

 

It can be difficult to navigate the jargon-filled world of taxes, so if you're struggling to grasp the basics of the PAYE tax system or you need an answer to a specific problem, you're not alone!


1.The Basics of PAYE

So..what exactly does 'PAYE' mean?

Well...the term PAYE stands for ‘Pay As You Earn’ and is a system the Irish Government uses to charge you income tax, Universal Social Charge (USC), and Pay related Social Insurance (PRSI) (if applicable) on your income. Each time you’re paid, your employer deducts tax from your income, which is then paid directly to Revenue who collect taxes on behalf of the Irish government.

The PAYE system also ensures the yearly amounts you pay are collected evenly on each payday over the course of the tax year.

 

Who pays PAYE income tax?

Most people who work in Ireland pay income tax on their earnings through the PAYE system, so unless you're contracting or self-employed, then you're probably paying tax through the PAYE system.

Each time you get paid, your payroll will deduct tax from your salary and you’ll see how much was taken on your payslip. If you’re self-employed however, you’ll need to file an income tax return every year and pay any taxes you owe by the 31 October deadline. The PAYE system is also in operation for pensioners upon retiring from pensionable employment.

The average Irish tax refund is €1076.17

GET YOURS NOW

What is PRSI?

PRSI is another deduction you’ll see on your payslip each time you’re paid. Pay Related Social Insurance (PRSI) is a contribution to the social insurance fund and most employees over 16 must pay this. You'll need to pay this whether you work full-time or part-time if you earn €38 or more per week.

Self-employed workers with an income of €5,000 a year or more aged 16 or over (and under pensionable age) are also liable for Pay-Related Social Insurance (PRSI) contributions. These contributions may give you an entitlement to claim benefits such as Jobseeker’s Benefit, Illness Benefit, and State Pension. So for example, if you become unemployed and you have enough contributions, you may be able to claim the Jobseeker’s Benefit while you're looking for work.


How much PRSI do I need to pay?

How much PRSI you pay is largely based on your earnings and the type of work you do. Your employer will deduct your PRSI and calculate the amount based on your social insurance class.

PRSI is taken at source by your employer and collected by Revenue who, along with the Department of Social Protection, will keep a record of your contributions. If you’re wondering how much is deducted from your pay, then you can see this on on your payslip/P60 from employer.

Social insurance contributions are divided into different categories known as classes or rates of contribution. The class and rate of contribution you pay is calculated by the nature of your work. Here are the 11 different social insurance classes in Ireland based on your occupation:

Table: Social Insurance Classes Ireland
Class J

Anyone earning less than €38 per week.

People aged over 66 or people in subsidiary employment are always insurable at Class J, no matter how much they earn.

Subsidiary employment for Class J is for example, people who are insurable at Class B, C, D or H in their main employment.

Only Occupational Injuries Benefit is covered by Class J social insurance.

Class E

Ministers of religion employed by the Church of Ireland Representative Body. It covers all social insurance payments except Jobseeker's Benefit and Occupational Injuries Benefit.                                        

Class B

Civil servants and Gardaí recruited before 6 April 1995.

Registered doctors and dentists employed in the Civil Service.

Only covers only a limited number of social insurance payments.

Class C

Commissioned Army Officers and members of the Army Nursing service recruited before 6 April 1995.

Covers only a limited number of social insurance benefits.

Class D

Permanent and pensionable employees in the public service other than those mentioned in Classes B and C recruited before 6 April 1995.

Covers only a limited number of social insurance payments.

 Class H  

Non-Commissioned Officers and enlisted personnel of the Defence Forces.

Covers all social insurance payments except Occupational Injuries Benefit.

Class K  

Public office holders with an income of over €5,200 a year.

People who pay PRSI on unearned income.

Public office holders with weekly income of €100 or less are recorded under Class M.

There are no social insurance payments for people insured under Class K.

Class M  

Employees with no liability to contribute to social insurance.

Employees under 16 years of age and people with an income of €500 or less and insured in Class K.

Class M covers certain contributors with Occupational Injuries Benefit.

Class S

 Class S applies to self-employed people including certain company directors, people in business on their own account and people with income from investments and rents. It covers a limited number of social insurance payments.

 

Class A 

Most employees in Ireland are Class A. This applies to employees in industrial, commercial, and service type roles under a contract of service with a reckonable pay of €38 or more per week.

 Also includes civil and public servants recruited from 6 April 1995. People on CE schemes pay a special contribution at Class A8/A9.

Class P

Sharefishermen or Sharefisherwomen classified as self-employed and already paying PRSI come under Class P. This class provides limited Jobseeker's Benefit, limited Illness Benefit and Treatment Benefit.

 

What is USC (Universal Social Charge)? 

You must also pay USC on your income. USC or the Universal Social Charge is a tax on your gross income that replaced both the health and the income levy in January 2011. Chances are if you work in Ireland you'll need to pay USC and you'll see it deducted on your payslip each time you're paid.

All employees earning over €13,000 in gross income will pay USC.

Table: Standard Rates of USC 2019


First €12,012
0.5%
Next €7,862 2%
Next €50,170  4.5%
Balance 8%

 

 

You'll qualify for reduced rates of USC:

  • If you're aged 70 or over and your total income for the year is €60,000 or less

  • If you're a medical card holder aged under 70 with a total income of €60,000 or less-If your income is more than €60,000, the standard rates of USC apply to your full income.

Table: Reduced Rates of USC 2019
Up to €12,012 0.5%
Income over €12,012 2.%

Please note: USC rates apply to you and your spouse/civil partner individually, they can't be combined or transferred.

 

What income is exempt from USC? 

Insome cases, your income may be completely exempt from USC. We've listed them below.

 

Your income is exempt from USC if you earn less than:

  • €13,000 in 2018

Table: Payments that are exempt
Payments from Community Employment Schemes and Back to Education Allowance
Social welfare or similar payments made from abroad
Student grants and scholarships
Statutory Redundancy Payments
Redundancy payments above the statutory redundancy amount-Universal Social Charge up to certain limits

How maintenance payments are treated for Universal Social Charge purposes depends on whether they are voluntary payments or legally enforceable payments

Employer’s or pension provider’s contribution to an approved retirement benefit scheme is not liable to the Universal Social Charge, but the employee's contributions are

Department of Social Protection pensions or similar pensions from abroad are exempt
The USC is only payable on lump sum pension payments on the The USC is only payable on lump sum pension payments on the portion over €500,000
Blind Welfare Supplementary Allowance
Community Employment Scheme
Fund for Students with Disabilities
Job Initiative Scheme
Mobility Allowance
Vocational Training Opportunities Scheme (VTOS)
Income where DIRT (Deposit Interest Retention Tax) has already been paid
Certain salary sacrifice schemes, such as the TaxSaver Commuter Ticket Scheme and the Cycle to Work scheme
Income qualifying for Childcare services relief 
 Foster care payments
 Child Benefit
 Income qualifying for Rent a Room Relief
 Income from scholarships
Youthreach Training Allowance
Early childhood and education scheme

Maintenance Payments and USC

How maintenance payments are treated for Universal Social Charge purposes largely depends on whether they're voluntary or legally enforceable payments.

 

1. For Voluntary maintenance payments under an informal arrangement:

The spouse making the payments isn't exempt from USC on the portion of their income on which they pay as maintenance, however the spouse who gets the payments isn't subject to USC on the maintenance payments. 

 

2. Maintenance payments under legal obligation:

If you’re the one making payments to a spouse, you’re entitled to an exemption on the portion of your income on the maintenance paid to your spouse, however there’s no exemption for any portion of maintenance payments paid towards the maintenance of children.

The spouse who receives payments is subject to the Universal Social Charge on the portion of maintenance payments they get, however any portion of maintenance payments paid towards the maintenance of children won't be subject to the Universal Social Charge.

 

Other Rates of USC

There are a couple of items subject to different rates of USC, these include:

 

1. Non-PAYE income above €100,000

On non-PAYE income above €100,000, there's a surcharge of 3% per year.

 

2. Certain bank bonuses

A rate of 45% applies to bonuses paid to employees of building societies and banks that received state financial support. If the payments are €20,000 or less in a year, standard rates of USC apply. If the payments exceed €20,000 in a year, the full amount is charged at 45% USC.

 

This applies to:

  • Allied Irish Bank

  • Anglo Irish Bank

  • Bank of Ireland

  • Educational Building Society

  • Irish Nationwide Building Society

 

3. Property Relief Surcharge

An additional 5% rate of USC applies to taxable income that is 'sheltered' by property reliefs. This includes property-based capital allowances and relief for residential lessors known as 'section 23-type' relief. The property relief surcharge doesn’t apply if your gross income is less than €100,000. 

 

The surcharge applies to:

  • Capital allowances made in or carried forward to the 2012 tax year and any later tax year

  • Any losses carried forward to 2012 or a later year that are due to section 23-type relief20

 

How is my income tax calculated?

Any income you earn is charged at the standard rate of 20% up to a certain amount. This amount is called your standard rate cutoff point. Anything you earn above this amount is charged at a higher rate of tax, which is currently 40%.

So how much tax you pay mainly comes dow to how much you earn and your circumstances, e.g. are you single or married, do you look after dependents, and more. You'll see how much tax you pay on your payslip. 

Table: Standard Rate Cutoff Points 2019
Your status Income Rate
Single person without dependents or children €35,300 20%
One parent family €39,300 20%
Married Couple/civil* partners one income €44,300 20%
Married Couple/Civil partners, two incomes Up to €70,600 (increase limited to the amount of the second income) 20%
All Categories Earned Income remainder 40%



For example:

If one person is earning €48,000 and their spouse or civil partner is earning €25,000: The standard rate cutoff point for the couple is €44,300 plus €26,300.

The increase in the standard rate band isn’t transferable between spouses/civil partners so the first spouse’s tax bands would be calculated as €44,300 @ 20% = €8,860 and €3,700 @ 40% = €1,480.

The second spouse or civil partner's tax bands would be calculated as €25,000 @ 20% = €5,000 and €0 @ 40% = €0 (total €5,000).

 

 

Tax Credits

Your liability for income tax is also reduced by any tax credits and reliefs you can claim each year. Eligibility often depends on your personal circumstances, so if you're looking after someone in your own home, paying for your own healthcare or are recently married, you may be able to get relief to reduce the amount of tax you pay. Tax credits will reduce the amount of tax you need to pay and are deducted after tax by the amount of credit.

Depending on your personal circumstances, you may be entitled to a number of tax credits.

Each year Revenue will send a summary of tax credits and standard rate cutoff point to your employer so they can deduct the correct amount of tax. If your circumstances change during the year, Revenue will issue a revised certificate.

This is why it’s really important that you ensure you’re getting the correct amount of credits and tell Revenue if your personal circumstances have changed. For example if you get married you should tell them because this could reduce the amount of tax you need to pay each year.

You can find more details on different types of tax credits and reliefs here.


Can I get a refund of unused credits?

You can’t get a refund of any unused non-refundable tax credits or carry them over into another tax year. And if you change jobs, you must give your employer your P45 so they calculate the correct amount of tax. If they don’t receive this information, then you’ll be taxed on a temporary basis called ‘emergency tax’.

Your tax credits are normally given for a full tax year on a 'cumulative basis'. This means that whether you start work in the first week or the 30th week of the tax year, you’ll still get the full year's tax credits.

If you’re on emergency tax or a ‘Week 1 basis’ (the 'non-cumulative basis'), different rules apply.

Under the PAYE system, tax credits, and deductions are spread evenly throughout the year. So if you’re working for the full year, your tax credits are divided into 52 weekly or 12 monthly equal amounts, depending on how often you’re paid.

 

Overpaying tax

There may be times you end up paying too much tax! I think we can all agree we don't want to end up in this situation so in this case it's important to check your payslip and P60. Taxback.com can also tell you if you overpaid tax for the last 4 years for free. You can claim tax back for up to 4 years. 

 

You could end up with an overpayment of tax if:

  • You got taxable benefits from the Department of Social Protection and the tax paid was calculated incorrectly by your employer, i.e. 

 

  • Your personal circumstances changed during the year (marital status or if you claimed tax credits and relief you were actually not entitled to)

 

  • You switched jobs during the year

 

You can contact Revenue for your Tax Credit Certificate to see if you’re availing of all applicable reliefs or contact Taxback.com for assistance and we’ll check for you.

 

Claiming tax back

If you think you're due tax back, you can go back up to 4 years to claim a refund, so for example if you have medical expenses, you can claim them from 4 years back.

Just remember that the deadline for filing your tax return is 31 October each year (this date is extended if paying and filing with Taxback.com and the Revenue online service). It's important to keep receipts for things like medical expenses in case Revenue ever requests them.

So for example, if you want a tax refund from 2015, then 2019 is your last year to make this claim.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

2. What do I pay tax on?

You’ll need to pay tax on almost all types of income. For example you must pay tax on wages, fees, perks, profits or pensions, benefits-in-kind, rental income, and many social welfare payments. We've listed some of them below.

 

Benefit-in-kind

Benefit in Kind is a non-cash benefit typically given by employers to employees. If the total value is more than €1,905  then you must pay tax on the benefits. However, employers can give their employees a once-off benefit with a value of up to €500 per year, tax-free.

For anything over this amount, tax must be paid.

If employers receive a repayment from an employee for the benefit, the value is reduced by that amount. Benefits given to an employee’s spouse, civil partner, family members, or dependents are also taxable.

Examples of benefits-in-kind include:

  • Company cars and vans (for mostly private use)
  • Living accommodation
  • Loans
  • Holidays
  • Payment of bills
  • Prizes
  • Medical insurance premiums
  • Childcare facilities 

The value of a benefit is generally calculated as the higher of:

● Employer's cost in providing the benefit

● The value of the benefit if it can be converted into money (less any payment you make to your employer for the benefit)

 

If you use a company car, you can reduce the amount assessed for tax if you have mileage for business purposes and this can be reduced ever further if you contribute to insurance costs, motor tax, or petrol.

 

Preferential home loans

Apreferential loanmeans a loan from your employer to you/your spouse/civil partner on which no interest is payable or interest is payable at a rate lower than the ‘specified rate’. An employee who gets a preferential loan is charged income tax on the difference between the interest actually paid and the amount which would have been payable at the 'specified' rates of interest for the loans.

The current rates are:

  • Qualifying loan for home (principal residence): 4%
  • Other loans: 13.5%

 

Small benefit relief

You can get a small non-cash benefit from your employer without paying PAYE, USC and PRSI. However the benefit must have a value of €500 or under (€250 up to 21 October 2015). This treatment doesn't apply to cash payments, which are taxable in full.

You can only avail of this relief once in a tax year and if the benefit is more than €500 in value (€250 up to 21 October 2015), then the full value of the benefit is subject to PAYE, USC and PRSI.

Table: Benefits that can be exempt or treated tax efficiently*

Bus/train passes for 1 month or more

Non-cash personal gifts

Employer's contribution to approved pension schemes

Mobiles, computer equipment, and home high-speed internet connections provided for business use (where private use is incidental)

Private use of company van for the purposes of work: Private use is prohibited

Bicycle and safety equipment as part of the Cycle to Work Scheme

Certain share and approved profit sharing schemes

Canteen facilities

Reimbursement of expenses incurred in the course of employment

Some accommodation provisions

Lump sum and certain redundancy payments

Working clothes


*This is not an exhaustive list and restrictions or conditions may apply

 

Cycle to Work Scheme

This initiative was designed with the aim of encouraging people to cycle to work.

Under the scheme, your employer can buy a bicycle and safety equipment for you and it will not be considered a taxable benefit-in-kind (subject to a €1,000 per bicycle limit).

Alternatively, you can approve a 'salary sacrifice' with your employer over an agreed period of time (no longer than 12 months) to cover the cost of the bike. Under such an arrangement, you will only have to pay Income Tax (IT), Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) on the balance of your salary.

Even if the cost of the bicycle and safety equipment was less than €1,000, employees can only avail of this scheme once every five years.

Note
The scheme does not cover:

• motorbikes, scooters or mopeds
• second-hand bicycles or equipment
• bicycle parts or associated equipment

Income that may be exempt from tax 

Some types of income are exempt from tax. These include things like social welfare payments, lottery wins, compensation, and scholarships. You may also be exempt from tax due to your circumstances, for example if you're a certain age or if you earn under a certain amount.

We've listed reasons and items in the table below.

Table: Income that may be exempt from tax 

Payments to approved pension schemes

Statutory redundancy payments

Certain social welfare payments

Scholarship income

Licensed lottery wins

Certain army pensions and allowances

HSE payments to foster parents

Some compensation payments under employment law

Compensation for a personal injury

If you’re on low pay, you may not be liable to pay any tax because your tax credits and reliefs are more than or equal to the tax you owe. There’s no income tax exemption for low income earners under 65

If you’re over 65 and your income is below certain limits. If your income is over the limit then you may benefit from marginal relief 

Interest from savings certificates and Savings Bonds and National Instalment Savings Schemes, within limits
Certain earnings by artists
Certain payments in respect of disabilities linked with Thalidomide

 

Age Tax exemption

People aged 65 years and over are subject to the same general tax rules as everyone else, but they have a tax exemption threshold below which they pay no tax and may be entitled to additional tax credits.

 

In the case of tax exemption you’re given a standard cutoff point and tax credit on your Tax Credit Certificate and the higher rate of tax applied is the marginal relief rate, currently 40%.  

Table: Exemption Limits for people aged 65 and over
Status 2019
Single, widowed or surviving civil partner €18,000
Married/civil partnership €36,000
First two children €575 each
Subsequent children €830 each


Some employees are also exempt from USC where employers are instructed not to deduct it. This will all depend on your income and any other circumstances.

 

Marginal relief

If you earn more than the exemption limit, you may be able to claim marginal relief. This means your tax is calculated in a different way in order to limit your tax liability. The relief is only be given when it’s more beneficial than calculating the tax due in the standard way and using your tax credits. The marginal relief rate is 40%.

 


Example:

Mary (67) is married with 2 qualifying children and an income of €38,000 in 2018 with a total tax credit of: €5440

Mary’s Tax Credits:

Personal Tax Credit: €3,300

Age Tax Credit: €490

PAYE tax credit:  €1,650


Her exemption limit is €36,000+€575+€575(for each child). Here total exemption is €37,150,

 

 

How she is taxed under the standard rate:

Income: €38,000

Tax at 20%: €7,600

Deduct tax credits of: €5,440

Tax Due: €2,160

 

How she is taxed under Marginal Relief Rate:

Income: €38,000

Less Exemption at: €37,150

Excess: €850

Total tax due at 40%: €340


In this case it’s better for Mary to be taxed at the marginal relief rate because the tax due is less than when she uses the tax credits.

 

Tax on income outside of PAYE

Even if you’re a PAYE employee, there may come a time when you earn extra income on the side. In most cases you must pay tax on this income and often if you earn over a certain amount, you’ll need to file a self-assessed tax return.

This typically depends on the source of the income and amount earned.

Table: Examples of income outside of PAYE

Rental income
Gifts/sponsored ads and content from blogging
Share-economy: e.g. hassle, deliveroo, done deal
Interest from deposits
Pension scheme contributions
Dividends from stocks and shares

 

DIRT (Deposit Interest Retention Tax)

DIRT is deducted at source by Irish financial institutions, such as banks, from deposit interest paid or credited to the accounts of Irish residents. The DIRT rate for 2019 is 37%. Your bank will deduct the DIRT before they pay you the interest and you can request a statement from them. It’s also up to the financial institution to decide if a deposit is subject to DIRT.
In some circumstances, you may also have to pay Pay Related Social Insurance (PRSI) on the interest. Universal Social Charge (USC) doesn’t apply to deposit interest.

Financial institutions can mean:

● A licensed bank of any of EU States

● A building society of any of the EU States

● Trustee savings bank

● Post Office Savings Bank

● Credit union


Capital Gains Tax (CGT)

Capital Gains is a tax on the gains when you dispose of an ‘asset’ such as land or property. When you own or part own an asset, you may sell, gift or exchange it and this is called a ‘disposal’.

Table: CGT is due on gains made from these assets 
Land
Buildings (houses, apartments, commercial property)
Company shares (resident or non-resident)
Assets such as goodwill, patents, and copyright
Currency (other than Irish currency)
Assets of a trade
Foreign life insurance policies and offshore funds
Capital payments (in certain situations)
You may also have to pay CGT on gains for other types of assets such as jewellery, antiques, paintings, etc. 
Cryptocurrency

 

Some gains are not subject to CGT and some are exempt only in certain circumstances.

Table: Gains in the following circumstances aren't liable to CGT

Up to a certain amount is your Personal exemption

You don’t need to pay CGT on the first €1,270 of your gain for each year

Disposing of your Principal Private Residence

You also don’t need to pay tax on the disposal of a property which you occupied or was occupied by a dependent relative as a sole or main residence. (Restrictions may apply where the property was not fully occupied as a main residence throughout ownership or where the sale price reflects development value).

If you let out your home at any point while you owned it, you can claim a partial exemption. The Rent-a-Room scheme doesn’t affect your claim for full exemption.

You may sell your home and surrounding land of up to 1 acre for its development value. In this case, the exemption will apply to the value of the house or land without its development value. You may have to pay CGT on the value of the house or land over that amount.

Lottery wins 

Gains from betting, lotteries, sweepstakes, and bonuses payable under the National Instalments Savings Scheme and Prize Bond winnings aren’t liable to CGT

Stocks and securities

 You don’t need to pay CGT on gains on Government Stocks and other securities (e.g. securities issued by certain semi-state bodies)

Disposal of wasting chattels (e.g. animals, private motor cars, etc)

A wasting chattel is a tangible moveable property that’s a ‘wasting asset’. Examples of wasting assets include bloodstock, livestock, motor cars and household furniture, and appliances (besides antiques).

The exemption doesn’t apply to wasting chattels for business purposes to the extent that the expenditure on the assets qualified for capital allowances. Neither does the exemption apply to commodities.

Life Assurance policies

Unless purchased from another person or taken out with certain foreign insurers on or after 20 May 1993.

Tangible movable property

 E.g. household furniture, where the consideration doesn't exceed €2,540.

 

Transferring land to a child

If you transfer land to your child to build a house which will be used as your child’s only or main residence, you won’t have to pay CGT on the transfer. A transfer in this case includes a joint transfer by you/and your spouse/civil partner to your child. This also includes a child whom you fostered.

This must have been for at least 5 years before the child reached the age of 18. You must support the claim that you fostered the child by evidence from more than one person.

 

To qualify for relief, the land must:

  • Be 1 acre or less
  • Have a value of €500,000 or less

Your child may pay CGT on the disposal of the land from you to them in 2 specific situations:

1. Without having built a house on that land or

2. If they built a house on the land, having not occupied that house as their only or main residence (this must be for a period of at least 3 years).

This rule doesn’t apply if the child disposes of the land to their spouse or civil partner.

 

If I need to pay CGT, how much do I pay?

This type of tax is a self-assessment tax and you must calculate the gain or loss arising on the asset you sold. Irrespective of whether a gain or loss was realised, you must report the gain or loss on a tax return.

Just remember that you don’t need to pay tax on the first €1,270 of your gain.

 

The rate of CGT also depends on the date of disposal, so after the tax-free amount you pay:

Date             CGT
6 December 2012 – present 33%
7 December 2011 – 5 December 2012 30%
8 April 2009 – 6 December 2011 25%
15 October 2008 – 7 April 2009 22%
Up to and including 14 October 2008 20%

 

Other rates apply for specific gains:

● Gains from foreign life policies and foreign investment products are charged at 40%

● Gains from venture capital funds are charged at 12.5% (individuals and partnerships) and 15% (companies)

● Windfall gains are charged at 15%

 

Calculating the gain

The gain/profit is usually calculated by the difference between the price you paid for the asset and price you sold it for.

In some cases, for example where an asset is disposed of by gift or acquired on the death of the previous owner, the market value is substituted for the sale proceeds and actual cost.

 

The following deductions can be considered when you're calculating your capital gain or loss:

  • Cost of acquisition

 

  • Inflation index if the asset/property was purchased before 2003

 

  • Expenditures incurred for the purpose of enhancing the value. 
For example, if a property was bought in 2005 for €200,000 and in 2007 a small guest house for €80,000 was built in the yard of the property, for the disposal, the cost deducted for tax purposes would be: €280,000

 

  • Incidental expenses incurred on acquisition or disposal, such as solicitor's fees, advertising costs, auctioneer's fees, accounting fees, etc

 

Disposal of shares

Special rules apply if you calculate CGT on gains from the disposal of shares.

A chargeable gain on the disposal of company shares is arrived at by deducting the cost of the shares (adjusted for inflation, as appropriate) from the net consideration received for the disposal of the shares.

The calculation is relatively straightforward where a person acquires one block of shares and at a later date, without there having been any changes in the number or type etc. of the shares held, sells all or part of that holding.

Often there will be increases in the shareholding, either because a person purchases additional shares of the same type or they receive additional shares under bonus or rights issues. There are special capital gains tax rules for these situations.

If you need more information, you can contact our advisors at Taxback.com about your particular situation.

 

Capital Gains Tax Reliefs

There are a number of reliefs available relating to CGT in certain circumstances. This will help reduce the amount of tax due on the disposal. We've listed them below.

 

1. Indexation Relief

Also known as ‘inflation relief’, this may be claimed if you owned the asset before 2003 and the market value of the asset at the time you became the owner is increased based on inflation calculated by the Central Statistics Office.

For example, if land is being used for development, relief applies to the value that the land would have had at the date you became the owner when it wasn’t development land.

Indexation relief was abolished for the tax year 2003 and any year thereafter, however you can get indexation relief up to and including 2002. If you acquired the property in 2003 or any subsequent year, then you can't avail of this relief.

 

2. Farm Restructuring Relief

If you dispose of land to make your farm more efficient then you may be able to claim this relief. Teagasc (the Agriculture and Food Development Authority) must issue a certificate in order for you to claim this relief.

This certificate must state that you carried out the transaction for farm restructuring purposes.

 

Conditions

  • The first sale or purchase must be from 1 January 2013-31 December 2019.

  • The next sale or purchase must be within 24 months of the first sale or purchase.

  • You may also be able to claim relief where you exchanged land with another person.

 

 

The amount of relief you can claim will be reduced if the land has a higher value than either:

● Land you purchased

● Land you received in exchange for your land

 

3. Revised Entrepreneur Relief

This relief is for you if you made gains from the disposal of business assets. There is a lifetime limit of €1 million for this relief on gains made on or after 1 January 2016. This relief replaced a relief that applied for the years 2014 and 2015.

With this relief, you must pay CGT at the rate of 10% on gains from the disposal of business assets. This is reduced from the normal rate of 33%. Up to 31 December 2016, gains from such disposals are charged at 20%.

 

4. Compensation and insurance money

You must pay CGT if you receive compensation or insurance money, however if you use the money to replace an asset you may defer the CGT.

The compensation you get reduces the cost of the asset. It can also reduce the replacement cost of the asset if you have lost it or it was destroyed.

 

Example:

Matthew receives compensation from his insurance for damage resulting for a recent flood. If he uses the money to repair damage to the property he can defer the CGT payment until the property is sold.

 

5. Land or buildings disposed of between 7 December 2011 and 31 December 2014

If you dispose of land between 7 December 2011 and 31 December 2014 then you may be due relief on CGT. You must have owned the land or buildings for at least 7 consecutive years.

 You can reduce the gain by the number of years you owned the property divided by 7 years, so if you owned land or buildings for 10 years, the gain will be reduced by seven tenths.

You can claim this relief in respect of land or buildings in this country or in any European Economic Area (EEA) state.

 

6. Disposal of a business or farm other than to your child (Retirement Relief)

If you’re 55 or older, you may be able to claim relief on disposing any part of your business or farming assets. Although this is called Retirement Relief, you don’t need to retire to avail of it.

 

There are some circumstances in which you may qualify for this relief before 55:

● You’re unable to continue farming due to ill health

● You reach the age of 55 within 12 months of the disposal

 

For disposals made up to and including 31 December 2013, you can claim full relief if the market value at the time of disposal doesn’t exceed €750,000.

 

The threshold is €500,000 if both of the following apply:

● The disposal takes place on or after 1 January 2014, and

● you’re 66 or older

 

If the market value is more than the above threshold, marginal relief may apply which limits the CGT to half the difference between the market value and the threshold.

The threshold of €750,000 (€500,000 after 1 January 2014 for persons aged 66 or older) is a lifetime limit. If you exceed this threshold, relief will be withdrawn on earlier disposals.

 

7. Disposal of a business or farm to your child

If dispose all or part of your business or farming assets to your child, you may be entitled to relief from CGT.

 

Your child in this case can include:

● A child of your deceased child

● A niece or nephew who worked full-time in the business or farm for at least 5 years

● A foster child whom you maintained for at least 5  years

 

The amount of relief depends on your age at the time of disposal:

● Up to 31 December 2013, you may claim full relief if you’re 55 or older

● From 1 January 2014, you may claim full relief if you’re between 55 and 65

● If you’re 66 or older the relief is restricted to €3 million

 

If your child disposes of the asset within 6 years, relief will be withdrawn and your child must pay CGT on the original disposal by you, in addition to the CGT on their own disposal.

 

You need a CG50A (CGT Clearance Certificate) certificate if:

● You sell an asset on or after 25 March 2002 for over €500,000

● You sell a house or apartment on or after 1 January 2016 for over €1 million.

The buyer is obliged to withhold 15% of the purchase price from you if you don’t have a CG50A Form. The buyer will then give you a Form CG50B. This will allow you to reclaim the amount withheld by them from Revenue at a later date.

 

You can apply for a CG50A using a Form CG50 and you must meet at least 1 of the following criteria:

● Be resident in the country

● Have paid CGT on the disposal, if it’s due

 

Alternatively, you can use the following Tax Clearance Certificates:

● A current Tax Clearance Certificate

● A certificate of authorisation (C2 cert)

● A Tax Clearance Certificate issued specifically for the purpose of Section 980, Taxes Consolidation Act 1997

 

How do I pay Capital Gains Tax?

If you're registered for income tax, you must report the capital gain/loss on a Form 11. If you're not registered for income tax, you can report it with Form 12 or complete a CG1 form.

Having calculated the tax due you should send a cheque for that amount to the Collector General's office in Limerick (the payment should be sent with a CGT payslip with relevant details on the payment).

CGT can also be paid online.

Whether you submitted a payment or whether the gain is relieved from tax or a loss arises on the disposal, you must submit a tax return or CG1 Form to Revenue to declare any disposals.

 

When do I need to pay?

For 2009 and subsequent years the tax year is divided into a set of 2 periods for CGT payment purposes:

 

1.Initial Period, for disposals between 1 January-30 November

You must pay CGT by 15 December of the same year.

 

2. The later period, Disposals between 1 December- 31 December

You must pay CGT by 31 January of the next year.

For disposals made under a written contract, the time of disposal is usually the date of the contract.

 

Capital Gains Tax Frequently Asked Questions

Q. What if I make a loss?

A. If you make a loss on the sale of a property, you still need to declare it. However, it can be utilised against any capital gain incurred in the same or subsequent period. For example even if a loss was realised on the sale of your house, it can be used against any chargeable gain incurred on the sale of other assets such as shares, land etc.

 

Q. Do I need to pay CGT on an investment property?

A. Yes, you must pay CGT on any gain in this instance. The gain you make in this case is the difference between the purchase price and sale price.

 

Q. What if I gift the investment property to my children?

A. The market value at the date of the gift is used as sales proceeds and CGT is then calculated in the normal manner.

 

Q. What if I sell part of my own garden to a developer?

A.You must pay CGT on the gains if the development land exceeds €19,050. Normally your main residence has principal private residence relief, however if the garden is sold for great than its current use value, then this constitutes the sale of development land.

The difference between the consideration and the current use value is liable to capital gains tax.

 

Capital Acquisitions Tax (CAT)

If you receive a gift, you may need to pay a 'gift tax' on it called Capital Acquisitions Tax. For example, if you receive an inheritance following a death, it may be liable to inheritance tax. These taxes are types of Capital Acquisitions Tax.


When do I need to pay CAT?

You’ll pay Capital Acquisitions Tax if a gift is valued over a certain limit and various thresholds apply, depending on the relationship between you (the beneficiary) and the gift giver (the disponer).


Exemptions and reliefs

There are also a number of exemptions and reliefs depending on the type of gift or inheritance. For example, if you receive a gift or inheritance from your spouse/civil partner, then you’re exempt from Capital Acquisitions Tax.

Also, the tax applies to property in Ireland even if the property isn’t in Ireland when either the person giving the benefit or the person receiving it are resident or ordinarily resident in Ireland for tax purposes.

Different thresholds apply based on the relationship of the giver and the person who receives the gift.

These thresholds apply for gifts/inheritance on or after 12 October 2016.

Table: Capital Acquisitions Tax Thresholds 
Group A: €320,000 Applies when the person receiving the benefit is a child of the person giving it. This includes a stepchild or adopted child.
Group B: €32,500 Applies where the beneficiary is a brother, sister, niece, nephew or lineal ancestor or lineal descendant of the disponer
Group C: €16,250 All other cases

 

Group A

Applies if the person receiving the benefit is a child of the person giving it.

This includes a stepchild or adopted child. It can also include a foster child if the child resides with you and was under your care at your own expense for a period or periods totalling at least 5 years before the foster child became 18.

This minimum period doesn’t apply in the case of an inheritance taken on the date of death of the gift giver or disponer. In this case the Group A threshold will apply provided that the foster child was placed in the care of the disponer prior to that date.

Group A also applies to parents who take an inheritance from their child but only where the parent takes full and complete ownership of the inheritance. If a parent doesn’t have full and complete ownership of the benefit, or if a parent receives a gift, Group B  will apply.

 

Group B

Applies where the beneficiary is a:

Parent (however if a parent inherits from their child with full and complete ownership of the inheritance then it’s exempt from tax if in the previous 5 years, the child took an inheritance or gift from either parent that wasn’t exempt from Capital Acquisitions Tax. In this case, no tax needs to be paid even if the inheritance from the child is over the threshold).

Grandparent, grandchild or great-grandchild (If a grandchild is a minor (under 18 years of age) and takes a gift or inheritance from his or her grandparent Group A may apply if the grandchild's parent is deceased).

Brother or sister, and nephew or niece of the giver (Group A may apply if the nephew or niece has worked in the business of the person giving the benefit for the previous 5 years and meets the following criteria:

-The nephew or niece is a blood relation rather than a nephew or niece-in-law

-The gift or inheritance consists of property used in connection with the business, including farming, or of shares in the company.

-If the gift or inheritance consists of property then the nephew or niece must work more than 24 hours a week for the disponer at a place where the business is carried on, or for the company if the gift or inheritance is shares. However if  business is carried on exclusively by the disponer, their spouse and the nephew or niece then the requirement is that the nephew or niece work more than 15 hours a week.

The relief doesn’t apply if the benefit is taken under a discretionary trust.

 

Group C

Applies to any relationship not included in Group A or Group B.

If you receive a benefit from a relation of your deceased spouse or civil partner, you can be assessed in the same group as your spouse or civil partner would have been if they were receiving a benefit from their relation.

For example, if you get a benefit from the father of your spouse/civil partner, the group threshold would be Group C.

However,  if you receive a benefit from the father of your spouse/civil partner and your spouse/civil partner is deceased, then the group threshold would be the same as for a child receiving a benefit from a parent, Group A.

 

Valuation

The valuation is the day that the market value of the property comprising the gift/inheritance is established. In the case of a gift, the valuation date is normally the date of the gift.

 

If it’s an inheritance, the valuation date is normally the earliest of the following dates:

● Date the inheritance can be set aside for or given to the beneficiary

● Date it’s actually retained for the benefit of the beneficiary

● Date it’s transferred or paid over to the beneficiary

 

The valuation date is typically the date of death in the following circumstances:

● Gift made in contemplation of death (Donatio Mortis Causa)

● Where a power of revocation hasn’t been exercised-This could  happen if a person makes a gift of property but reserves the power to take back the gift. If he or she dies and this power ceases, the recipient then becomes taxable as inheriting the benefit.

If the beneficiary had free use of the benefit before this, he or she will be taxed as receiving a gift of the value of the use of the property.

 

Taxable value

A gift acquires its market value at the time you become entitled to it. The value that’s taxable is then the market value after following deductions:

  • Any liabilities

  • Costs and expenses that are properly payable

  • Including debts due to the inheritance or gift-for example, funeral expenses, costs of administering the estate or debts owed by the deceased

  • Stamp duty, legal costs.

 

If you make a payment for the benefit or some other contribution in return for it, this may be deducted and is known as a 'consideration' and could be a part payment or payment of debts of the donor.

If you don’t get full ownership but instead receive a benefit for a limited period, then a number of factors are taken into account to calculate the value.

 

Rates

Capital Acquisitions Tax is charged at 33% on gifts or inheritances made on or after 6 December 2012 (the rate was formerly 30%).

This only applies to amounts of capital gain over the group threshold.

Table: Exemptions from CAT
Gifts/inheritances from a spouse/civil partner
Payments or compensation for damages
Benefits used only for the medical expenses of permanently incapacitated person
Benefits taken for charitable purposes or received from a charity
Lottery, sweepstake, game, or betting winnings
Retirement benefits, pension, and redundancy payments are usually not liable

 

The first €3,000 of the total value of all gifts received from one person in any calendar year is exempt. This doesn't apply to inheritances.

If you receive a gift or inherit a house that was your main residence, it may be exempt from tax if you don’t own or have an interest in another house however there are conditions on how long you should be resident before and after receiving the benefit.

If a parent receives inheritance from his/her child and takes complete ownership of the inheritance, it’s usually taxable under Group A. However it’s exempt if in the previous 5 years, the child took an inheritance or gift from either parent and it was not exempt from Capital Acquisitions Tax.

Other exemptions relate to certain Irish Government securities, bankruptcy, heritage property, and support of a child or spouse.

If you;re confused about Capital Acquisitions Tax you can email us at info@taxback.com or live chat with one of our friendly advisors here. 

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

3. Starting work in Ireland

When you start employment in Ireland under the Pay As You Earn (PAYE) system you’ll immediately begin to pay tax (including PAYE, PRSI, and USC) on your income.

You’ll have to pay a number of different taxes and the amount of tax you pay depends on your salary and personal circumstances. Tax is normally withheld from your wages and your employer then submits the tax to Revenue.

 

Here are some tax terms you should understand when starting work in Ireland:


Pay As You Earn Tax (PAYE)

PAYE is charged on the basis of your gross income. How it’s calculated depends on your yearly tax credits and income tax rate band. It can be calculated in 3 ways.

 

1. Cumulative basis

Your yearly tax credits and income tax rate bands are evenly distributed over the course of the tax year. 


2. Month 1/Week 1 Basis

Tax is deducted on a week 1 or month 1 basis. You're only entitled to 1 week or 1 month’s tax credits and income tax rate band. Unlike the cumulative basis, your tax credits and income tax rate band are not distributed evenly through the year. 


3. Emergency Basis

You can be taxed on an emergency basis if you don't give you new employer a P45 or Tax Credit Certificate. You can read more about it here.

The average Irish tax refund is €1076.17

GET YOURS NOW

Pay Related Social Insurance (PRSI)

PRSI is paid by employees between 16 and 66 years with very few exceptions. Your employer deducts this from your and makes PRSI payments on your behalf to Revenue/Department of Social Protection.

PRSI is calculated as a percentage of your earnings, before any of your pension payments, and allocated to the Social Insurance Fund. These contributions may entitle you to claim benefits such as Jobseeker’s Benefit, Illness Benefit, and State Pension. You can view your contributions on your payslip.

You can read more about PRSI here.


USC

You must pay Universal Social Charge (USC) if your gross income is more than €12,012 per year. USC is taxable on gross income (this also includes any additional pay such as Benefit-in-Kind and is calculated before any relief for certain capital allowances and pension contributions i.e. there is no relief from USC on pension payments).

Read more about USC here.

 

Tax Credits

Tax Credits are used to reduce your income tax liability and the amount of credits available to you depends on your personal circumstances. However, everyone in PAYE employment is entitled to a PAYE credit of maximum €1,650. 

Anyone with an annual PAYE income (employment income, DSP income) under €8,250 is entitled to 20% of his/her income as PAYE credit (for example a person with total employment income for a year of €7,000 will be entitled to a €1,400 PAYE credit).

Not all tax credits will be factored into payroll and in some cases additional tax credits may be claimed after the year end resulting in a refund. Tax credits represent euro for euro the actual money in your pocket i.e. a tax credit of €100 means a tax saving of €100.

Read more about different types of tax credits and reliefs here.

 

Tax Bands

There are currently 2 rates of PAYE tax in Ireland, the standard rate of 20% and the higher rate of 40%. The first portion of your income is taxed at the standard rate and once you’ve earned a certain amount, everything after that is taxed at 40%.

Your tax band confirms the amount you can earn before being taxed at 40% and this band is allocated on an annual basis, divided out into weeks or months to help spread your tax evenly.



How is your tax calculated?

When you’re being paid, your employer will apply PAYE and USC tax based on information from Revenue on your employee Tax Credit Certificate. If Revenue doesn’t have up-to-date information on your personal circumstances (marital status, dependents, etc.), this could result in the incorrect allocation of tax bands and credits.

So for example, if you get married/enter into a civil partnership, you should inform Revenue (with your PPS numbers) as quickly as possible because you could end up paying more tax than necessary.


PAYE tax deductions are calculated using one of the following 3 different methods:


1.Cumulative basis

The purpose of the PAYE system is to ensure that an employee's tax liability is spread out evenly over the year. To ensure this, PAYE is normally calculated on a cumulative basis. This means that when your employer calculates your tax liability, they actually calculate the total tax due from 1 January to the date on which the payment is being made.

The tax to be deducted in a particular week or month is the cumulative tax due from 1 January to that date reduced by the amount of tax previously deducted. The cumulative system operates for both tax credits and standard rate cutoff points.

Any tax credits and/or standard rate cutoff point which aren’t used in a pay period are carried forward to the next pay period within that tax year.

Another feature of the cumulative basis is that refunds can be made to an employee where, for example, the employee's tax credits and standard rate cutoff point have been increased.

Tax is calculated at the standard rate of tax on pay up to the amount of your standard rate cutoff point. Any balance of pay above the cumulative standard rate cutoff point is taxed at the higher rate of tax.

The tax calculated at the standard rate is then added to the tax calculated at the higher rate to arrive at the gross tax figure. The gross tax figure is then reduced by the amount of your individual tax credits to calculate how much tax due in that pay period.

 

So, for example:


If you're a single person and you earn €41,600 per annum (€800 per week), Revenue will issue a Tax Credit Certificate to your employer showing the following figures:

Standard rate cutoff point = €35,300 (per year), €678.85 (per week)

 Tax credits -= €3,300 (per year), € 63.46 (per week)

 

The rates of tax are taken as 20% (standard rate) and 40% (higher rate). The tax calculation for week number 1 would be:

€678.85 @ 20% = €135.77

€121.150 @ 40% = €48.46

Gross tax = €184.23

  Less tax credit of €63.46

 Net tax due = €120.77

 

2. Non-cumulative basis (week 1/month 1 basis)

In certain circumstances Revenue may direct your employer to deduct tax on a week 1 or month 1 basis. Where the week 1/month 1 basis applies, your pay, tax credits, and standard rate cutoff point are not accumulated for tax purposes.

Your pay for each income tax week or month is dealt with separately. The tax credits for week 1 (or month 1) are applied to pay for each week (or month) and tax is deducted accordingly. You can’t receive any tax refunds in such cases.

Where your employer holds a Tax Credit certificate on a cumulative basis and they subsequently receive a Tax Credit Certificate or tax deduction card issued on a week 1/month 1 basis, the new basis will apply from the first payday after the date of issue printed on the certificate.

 


3. Temporary basis & Emergency basis

Your employer must use the temporary tax deduction basis if they’ve been given parts 2 and 3 of a current year or preceding year form P45, stating:

  • Your PPS number and

  • that you weren’t on the emergency basis

  • And the employer has sent part 3 of the form P45 to Revenue and is waiting for a Tax Credit Certificate from Revenue.

Entries on the temporary tax deduction card are made on a non-cumulative basis (week 1/month 1 basis) and the calculation of tax due each week (or month) is done on the same basis as in the week 1/month 1 procedure outlined above.

Your employer should give you weekly or monthly tax credits and standard rate cutoff point shown on form P45 on a non-cumulative basis (week 1/month 1 basis).

You can’t receive a refund of tax while using a temporary tax deduction card.

If you can’t supply your P45 and PPS number when you start a new job, your employer will be obliged to deduct tax on an emergency basis. In short, this will mean you will pay a higher level of tax until you can supply your P45 and PPS number.


What happens when I start work for the first time? 

When you start your new job, your employer must deduct tax from your pay under the PAYE system. To make sure your your employer deducts the right amount of tax, you should register the details of your new job with Revenue.

It’s best to do this as soon as you accept an offer, even if it’s only part-time or holiday employment. This gives your employer and the tax office time to get things sorted out before your first payday.

Revenue will then send a Tax Credit Certificate to you and your employer which shows the total amount of your tax credits and rate band. You should ask your employer if they have received this a week or two after you have registered the new job with Revenue or provide them with the one you received.


When do I start paying income tax?

You’ll typically pay tax from your first payday. The amount depends on your income and tax credits. If your pay on any payday is less than your tax credits then you don’t pay tax on that day. If your pay is more than your tax credits, you pay tax on the difference.

If you start work in the first week/month of the tax year your employer will deduct 1 week’s/month’s fraction of your annual tax credits from your first week’s/month’s pay and will deduct tax from the balance.

So for example, if you start work in the 27th week of the tax year your employer will calculate your gross tax on your wages but you’ll have 27 weeks of tax credits to offset against this liability. This will continue until you utilise all your unused tax credits.

 

What do I pay tax on?

You pay tax on earnings of all kinds arising from your job including bonuses, overtime, and non-cash pay and you can read more about it here


You don't pay tax on:

  • Scholarship income

  • Interest from Savings Certificates, Savings Bonds, and National Installment Savings Schemes with An Post

  • Payments to approved pension schemes

 

If you’re starting a job for the first time you should:

1. Give your PPS number (Personal and Public Service Number) to your employer so they can inform the tax office that you’re working.


2. Apply for a Tax Credit Certificate by registering for myAccount on the Revenue website. When you receive your myAccount password, you can register your new job using the Job and Pension service in myAccount. The tax office will then issue a Certificate of Tax Credits and cutoff point in two working days, which you can give to your employer.



Emergency tax

When you start your new job, you should give your employer your P45 (parts 2 and 3) and your PPS number. Your P45 is a statement of your earnings, tax, Universal Social Charge, and PRSI deducted in your last job. When your new employer gets your P45, they’ll inform the tax office so a credit certificate can be sent to them.

The best place to get your P45 is from your previous employer and your PPS number can be found on tax documents or communications from a social welfare or tax office. It may also be on payslips from previous employment. If you don't know your PPS number, you can contact your local social welfare office.

If you can’t supply your P45 and PPS number, your new employer will deduct tax on an emergency basis and give you a temporary tax credit for the first month of employment, but tax deductions will be increased progressively from the second month onwards.

The effect of emergency basis is that after 4 weeks no tax credits are given and tax is paid at the higher rate from week 9, regardless of the level of pay.

If you’re starting your job for the first time, you should contact Revenue to request a Tax Credit Certificate to give to your employer.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

What happens when I don't give my PPS number to my employer?

Where you can’t supply a PPS number, your employer is obliged to calculate your tax at the higher rate with no tax credit. When you subsequently provide your PPS number, the normal emergency basis will apply to the earnings in that and subsequent weeks.

If emergency tax was deducted from you, you can apply for a refund as soon as you become unemployed. Alternatively this can also be repaid via payroll if you provide your new employer with your P45.

You can see the emergency rates in the tables below.

Tax Rates 2015-2019
Standard rate 20%
Higher rate 40%

 

Emergency rates where you provide your PPS number 2019 
Weekly Paid Weekly Cutoff Point Weekly Tax Credit
Weeks 1 to 4 €678.42 €32
Weeks 5 to 8 €678.42 €0.00
Week 9 onwards €0.00 €0.00

Emergency rates where you provide PPS number 2019
Monthly Paid Monthly Cutoff Point Monthly Tax Credit
Month 1  €2,941.67 €138
Month 2 €2,941.67 €0.00
Month 3 onwards €0.00 €0.00

 

Where you provide a PPS Number 2019
Weekly paid Weekly Cutoff Point Weekly Tax Credit
Weeks 1 to 4 €678.85 €32
Weeks 5 to 8 €678.85 €0.00
Week 9 onwards €0.00 €0.00

 

Where you provide a PPS Number 2019
Monthly Paid Monthly Cutoff Point Monthly Tax Credit
Month 1 €2,941.67 €138
Month 2 €2,941.67 €0.00
Month 3 onwards €0.00 €0.00

 

Second or multiple jobs

If you take up a second job, the PAYE system will treat one job as your main employment. Revenue will then give your tax credits and rate band to that job.

You should contact Revenue as soon when you start your second job to ensure you receive a separate Tax Credit Certificate for each employer. Without this, your new employer may deduct the incorrect amount of tax from your pay.

If you’re receiving a pension from a former employer (occupational pension), this is taken to be your main employment for tax purposes and any other jobs you have are treated as second or multiple jobs.

 

Splitting tax credits

When you start a 2nd job you can:

  • Leave all your tax credits, tax rate band, and Universal Social Charge (USC) rate band with your main job

  • Or divide your tax credits, tax rate band, and USC rate band between your jobs in any way you want

  • Or transfer any unused tax credits, tax rate band, and USC rate band to your other jobs

 

It’s important to remember that splitting your tax credits and rate bands between jobs won’t change the total amount of tax you pay. However it can ensure you pay an even amount of tax in each job and get the full benefit of your tax credits and rate bands during the year.

Some tax credits or deductions such as flat-rate expenses can’t be split as they are given only for specific jobs.

 

What if I've been out of work?

If you’ve been out of work for a while, you may not have a P45. In this case, you should contact your local revenue office as soon as possible so your tax credits and cutoff point can be accessed.

Your spouse/civil partner may be using the tax credits you’re due if you’re being assessed as a married couple. If your new role is temporary then it might not be worth looking at these tax credits for that year.

However, you’re entitled to a PAYE allowance and expenses in your own right if you qualify for them. These can be set against your income and aren’t transferable to your spouse. If your spouse isn’t in receipt of taxable income you may be able to claim additional tax credits.

 

Returning to work after unemployment

If you’re unemployed before starting your first job or unemployed between jobs, then you might be able to claim a tax refund immediately. This is typically the case if you were unemployed for a period of at least 4 weeks. If you were taxed on Emergency basis you may apply immediately for a refund on becoming unemployed.

If you were unemployed between jobs, you may end up with unused tax credits, which could result in a tax refund, so it’s worth reviewing your tax position at the end of the year. If you were on Jobseeker’s Benefit or Illness Benefit while out of work, you should contact your local tax office when you resume employment.

If you’re returning to work after a significant gap, you need to ensure your tax and PRSI deductions from your wages are correct. Your new employer must deduct tax and USC from your pay from the beginning of your employment.

 

To make sure your tax is dealt with properly from the start you should:

  • Give your employer your PPS number and ask for your Employer's Registered Number

  • Register the details of your new job with Revenue


Ideally you should take these steps as soon as you accept an offer of a job. This will give your employment and the tax office time to get things sorted.

When you’ve registered the details of your new job, Revenue will send your employer a Tax Credit Certificate showing the tax credits your employer deducts from your tax bill. Otherwise your employer will tax you on an emergency basis.

 

PRSI and unemployment.

Giving your employer your PPS number will also allow your social welfare contributions to be recorded along with any contributions you paid in previous periods of employment. If you’ve been out of work for a number of years however, you won’t qualify for short-term social welfare payments such as Illness Benefit immediately. You’ll be immediately covered for Injury Benefit if you’re unable to work due to an accident at work.

How soon you qualify for the various social welfare benefits will depend on the type of benefit and circumstances before returning to work.


Medical cards and unemployment

If you’re unemployed and returning to full or part-time work, you can keep your medical card for 3 years (from the date you start work) as long as you’ve been getting one of the following allowances or benefits for 12 months or more:


  • Jobseeker's Benefit

  • Jobseeker's Allowance

  • Illness Benefit

  • Invalidity Pension

  • Disability Allowance

  • Blind Pension or

  • Have been on an employment incentive scheme or educational opportunity scheme

 

Rent Supplement

When you re-enter employment, if you’ve been unemployed or not in full-time employment for at least 12 months and are assessed as in need of housing under the Rental Accommodation Scheme, you may be entitled to retain your Rent Supplement.

 

Understanding your payslip

Your employer may prefer to pay your wages on a weekly or monthly basis. Regardless of how you’re paid, it’s likely your employer will send you a payslip when money is transferred into your account. We've explained the various terms that you'll see on your payslip below.

 

Sample Payslip

Your payslip will include a number of details including:

 

1. PPS Number

Your Personal Public Service (PPS) number is a unique identifier which is used for:

  • tax purposes

  • when you need to access social welfare benefits

  • and for public services and information in Ireland




2. PRSI Class

Your PRSI Class is dictated by your employment and influences the amount of PRSI contributions you pay. There are 11 different classes. See a list of classes here.


3. Weekly/monthly cut-off

The amount you earn each time you’re paid before you pay the higher rate of tax. Every time you’re paid, you pay tax at the standard rate up to your standard rate cut-off point.



4. PAYE

Pay As You Earn (PAYE) is a system of deducting income tax, PRSI, and USC from your income.



5. Tax Credit

Every person is entitled to tax credits. These credits differ from person to person and are based on personal circumstances. Your tax credits are allocated each year and tax is calculated as a percentage of your income.

Tax credits are deducted from this to leave the amount of tax you’ll pay. Any unused credits are forwarded to your next pay period(s), so the tax credit will reduce your tax by the amount of the credit.



6. PRSI

Most employees in Ireland need to contribute Pay Related Social Insurance (PRSI). These deductions go towards Social Welfare benefits and pensions. How much you pay depends on your job, earnings, and PRSI class.

 

7. USC

If you earn more than €12,012 per year (gross), you’ll pay the Universal Social Charge (USC).

 

8. Gross Pay

Gross Pay is the total amount you’re paid before any deductions are made.



9. Net Pay

Here you’ll find the total amount you’re paid after tax, PRSI, and other deductions.



10. Deductions

The total amount of money deducted in that pay period.

 

Table: Other standard payslip terms explained
Company name Your employer’s name
Current period Indicates this payslip is for this pay period.
Emp name Your name goes here
Frequency How often you get paid. So, for example, M = Monthly, W = Weekly, F = Fortnightly, 4 = Four-Weekly, B = Bi-Monthly
Pps no Your Personal Public Service Number
Emp no If you have an employee number you can find it here
Dept Department you work in will be detailed here
Cost Details of the cost centre allocated to you by your employer
Pay period Pay period the payment relates to. If you’re paid monthly the number 2 will indicate February. If you’re paid weekly, 2 will indicate the second working week of the year
Pay date Date you would receive the net pay in your account is outlined here
T/N/G

T =Taxable payment or deduction. N = net payment or deduction. G = gross deduction

Other deductions These are voluntary contributions
Pension Pension contributions you made
AVC Additional Voluntary Contributions towards pension
Health Health insurance contribution for dependents
Summary of pay A Summary of your pay for this period
Gross pay Total taxable income for this period
Total deds Total deductions for this period. Statutory and Voluntary Contributions
Non-tax adj Details of Non Taxable Adjustments
Rounding If any rounding was carried out it will be detailed here
Net pay Amount you’ll receive after paying all statutory taxes and voluntary contributions
Pay method The way you get paid. PayPath directly to your bank or by Cheque
Cumulative details This sections outlines your year-to-date earnings and tax allowance summary
Non-tax deds Pension/PRSA and other gross deduction contributions this year
Taxable pay Taxable earnings in the current year
Tax credit Personal Tax Credit used this year
Std. Cut-off Standard Rate Cut-Off Point used this year
Tax paid Tax paid (PAYE) so far this year
Tax/PRSI Details Tax Status and PRSI Contribution details
Tax code Tax code used to calculate your PAYE tax. N = Normal/Cumulative Basis, W = Week 1/Month 1 Basis, E = Emergency Basis
Emr st period Indicates if you started on emergency tax basis this year
Tax Credit Tp Personal Tax Credit's value applied
Pay rel code PRSI Class at which PRSI is calculated
Total ins weeks Total number of insurable weeks to date you’ve been in this employment from start of the year
Comments Outlines details of employer contributions
Emp'er PRSI per Employer PRSI Contribution this period
Emp'er PRSI td Employer PRSI Contribution for the year to date
Tp pener Amount of Employer Pension/PRSA Contribution this period
Ty pener Amount of Employer Pension/PRSA Contribution paid in the tax year
Bik ytd Details of Benefit in Kind paid this year

 

Understanding Your P60

Your P60 is basically a document that summarises your tax, PRSI and USC deducted by your employer in the relevant tax year. You should get a P60 by 15 February each year from your employer if you were employed on the last day of that year i.e. 31 December.

If you leave employment during the tax year, then you’ll get a P45 instead.

Employers must deduct tax based on the Tax Credit Certificate issued to them by Revenue. So it's important Revenue has the correct information for you. At Taxback.com, we can check your P60 to see if you've overpaid tax.

A P60 isn't a Revenue assessment of your position or an indication of your final tax liability for the year.

 

Article: Read how your P60 can make you money here

 

Sample P60


Top portion – Personal details

Here you’ll find the year the file relates to as well as a number of your personal details including:

  • Name

  • Address

  • PPS number

  • Tax credit

  • Rate band information

 

Note: The tax credit and band are merely a summary of what’s been applied by payroll.

 

Section A – Taxable pay

Details of your gross taxable pay for the year. It’s important to remember the figure here will be after pension deductions or similar contributions made through payroll. Also, if you changed jobs during the year, your pay details in this section will be split into the salary paid by your previous employers and what you’ve been paid by your current employer.

 

Section B – Tax deduction

Details your total tax deduction in the year. Again, the tax paid details will be subdivided by employer if you changed jobs during the year.

 

Section C – Local Property Tax (LPT)

Here you will find details of LPT deductions.

 

Section D – Pay for Universal Social Charge (USC)

In section your total pay for USC purposes is outlined.

 

Section E – USC Deducted

Here you'll see how much of your pay was subject to USC  in the year. This figure may not be the same as the amount of pay subject to tax as it will be prior to the deduction of pension contributions.

 

Section F – PRSI in this employment

This outlines exactly how much PRSI you paid in the previous tax year.

 

The bottom section

The last section is where you can see details of your employer’s name, registration number, and address.

You can send your P60 to info@taxback.com to help us determine if you can claim a PAYE tax refund.

 

Check out this interactive example with full explanations here. 

 

Calculating how much tax you'll pay in 2019

While your payslip and your P60 will  both tell you how much tax you pay currently, you can use our calculator to work out what your pay once the announcement in Budget 2019 have kicked in which include a cut to USC and expension of income tax bands:

Leaving Ireland and tax

If you emigrate it’s a good idea to bring as many important documents with you as you can in addition to your passport.

Table: Important documents
Your birth certificate
Driving licence
Student card
Any visas or work permits you may need
European Health Insurance Card
Any relevant certificates from education or training courses
References for work
A record of your employment and social insurance contributions in Ireland can all be extremely useful to have as you're setting up, you can do this by filling out a U1, see below


Where can I find a record of my employment in Ireland?

Before you leave Ireland, you should get a Form S1 (certificate of entitlement to healthcare if you don't live in the country where you're insured) and Form U1 (statement of insurance periods to be taken into account when calculating an unemployment benefit) from the Department of Social Protection.

These forms have details of your Irish social insurance record and you’ll need them if you want to claim sickness, maternity, or unemployment benefits in another European country.

This is what the first page of the U1 form looks like:

Processing your application can take a few months as sometimes the department needs to make enquiries with former employers. The more documents you can supply (including your P45 and P60) the easier it's to issue the forms!

If you don’t bring your S1 or U1 with you or if you haven’t received them and you need to claim a sickness or unemployment benefit in another European country, the country you’ve moved to can contact Irish authorities to get a record of your insurance contributions.

 

Is my Jobseeker’s Benefit payment transferable?

If you’ve been getting Jobseeker’s Benefit in Ireland for at least 4 weeks, it’s possible to transfer it to another European country for up to 13 weeks if you’re looking for work there. Your Jobseeker’s Benefit will be paid directly to you at the same rate as it was paid in Ireland.

 

How to transfer the benefit

To do this, you must inform your local social welfare office at least 4 weeks in advance of leaving Ireland and ask for a completed Form U1. You must bring this form to the social services office of the country you’re travelling to and register with the unemployment services there within 7 days of arrival.

You may transfer your Jobseeker’s Benefit payment more than once while you’re unemployed as long as you don’t exceed the total maximum of 13 weeks.

If you return to Ireland on or before the expiry of the 13 weeks in the other European country, you’ll still be entitled to Jobseeker’s Benefit in Ireland.

However, it’s important to be aware that if you transfer your Jobseeker’s Benefit payment to another European country and stay there for longer than 13 weeks, you’ll lose your entitlement to the payment if you return to Ireland. You’ll need to apply for a means tested payment instead (for example Jobseeker’s Allowance).

Means tested social assistance payments can’t be transferred to another country.

 

Reclaiming tax when leaving Ireland

If you worked and paid tax since 1 January and you’re now unemployed and/or leaving Ireland, you may be entitled to a tax refund if you have unused tax credits.

If you haven’t paid any tax, you won’t be due a refund.

The average Irish tax refund from Taxback.com is €1076.17 so it’s worth your while investigating if you have any tax refund entitlements. You can use our calculator to estimate a refund.

 

Can I get a refund of my PRSI contributions?

You can only receive a refund of PRSI contributions in limited circumstances, usually in cases where contributions have been paid in error or paid at the wrong rate.

 

What happens to my PPS number when I leave Ireland?

In short, nothing. Your PPS number is your unique reference number and is yours for life. You can use the same number if/when you come back to Ireland.

 

Tax abroad

Tax laws vary from country to country and it’s important to be aware of them. Be aware that unless you reside for a whole year abroad, you may have to pay tax on your earnings in Ireland.

 

How much tax will I pay abroad?

You’ll have to pay varying levels of tax depending on the country you move to. For example, if you move to Dubai or the Cayman Islands it’s likely that you’ll pay very little income tax. However, you’ll find a relatively similar tax burden to Ireland in most other popular destinations.

You may be able to reclaim some tax if you work abroad. For example, the average tax refunds with Taxback.com are $2600 for Australia, £963 for the UK and $904 for Canada.

 

Split-Year Treatment

If you’re moving abroad and will be resident in Ireland the year you leave and non-resident the next year, you can claim 'Split-Year treatment' in the year of departure. This means you’ll be treated as resident up to the date of departure.

All employment income up to that date is taxed in the normal way and your employment income from the date of departure is ignored for Irish tax purposes. Generally, full tax credits are allowable on a 'cumulative basis' which means you receive a full year of tax credits even though you’ve been resident here for only part of the year.

Similarly, if you’re coming to live in Ireland or returning after living abroad for a few years and you’ll be resident here for the next year, you can claim Split-Year treatment in the year you arrive.

This means  you’re treated as resident in Ireland from the date you arrive and all your employment income from that date is taxed in the normal way. Split-Year treatment only applies to employment income.

If you’re leaving Ireland, to qualify for SYT you must be resident in the year of departure and inted to be non-resident in the year following your departure. You don’t have to wait until the tax year following the year you arrive or depart. However you must satisfy Revenue that you fulfil the intended residence requirements for the following tax year. A letter confirming your employment or an employment contract are preferred forms of proof. If you're unsuccessful, you can reapply at the end of the following tax year.

If you have successfully qualified and fulfilled your intentions, you'll be taxed as resident in the state for the appropriate period. You should be aware that if you qualify for Split Year Treatment and don't fulfil your intention for some reason (e.g. ill health or cancellation of employment), the ruling will stand regardless. This could leave you liable to pay Irish tax on foreign employment income for the following year, if you were resident in the state for the previous tax year.

If yiou need help claiming Split-Year relief you can contact our firnedly team at info@taxback.com or live chat here.

 

Tax treaties

Ireland has tax treaties with more than 70 countries to ensure if you earn income that is taxed in one country, it won’t be taxed again in another country.

Under a tax treaty, a tax credit or exemption from tax may be given on some kinds of income, in either the country of residence or the country where you earned the income.

 

Redundancy

If you’re made redundant, you may receive a lump sum payment from your employer however if all of your lump sum is statutory redundancy, (subject to a maximum lifetime tax-free limit of €200,000), no tax will be due.

 

You’re entitled to one of the following tax exemption options on your redundancy payment, whichever is the higher:


1.Basic Exemption

The Basic Exemption due is €10,160 plus €765 for each complete year of service (this doesn't include statutory redundancy which is tax-free).

 

2. Basic Exemption plus Increased Exemption

An additional €10,000 (called the Increased Exemption) is also available in 2 circumstances.

a. If you haven't received a tax-free lump sum in the last 10 years and you’re not getting a lump sum pension payment now or in the future.

b. If you’re in an occupational pension scheme, the Increased Exemption is reduced by any tax-free lump sum from the pension scheme you may be entitled to receive.

 

3. Standard Capital Superannuation Benefit (SCSB)

This is an additional relief that typically benefits people with higher earnings and long service. It can be used if the following formula gives an amount greater than either basic exemption or Basic Exemption plus Increased Exemption.

 

Calculation of tax in redundancy

As mentioned above, a certain amount of your redundancy payment is tax-free and the balance will be taxed as part of the current year's income. The amount of your lump sum subject to tax is not subject to PRSI, but the Universal Social Charge may be payable.

 

Leaving employment to returning to education

More and more people are choosing to leave employment and return to education. If you leave a job to upskill, you may also be entitled to claim tax back.

For example if you pay fees to attend college, university or a training course, you may be able to claim relief. The limit on tuition fees you can claim is €7,000 per course and you’ll receive relief at the standard rate of tax which is 20%.

If you’re studying more than one third level course at the same time, the amount of qualifying fees is restricted to €7,000 per course and a single disregard amount (further detail below) is applied to the claim.

 

Note: No relief is available for examination fees, registration fees or administration fees.

Every claim is subject to a single disregard amount each tax year. This amount is taken away from your qualifying fees so you can’t get relief on that portion of the fees.

If you’ve paid fees for more than one course or student, you only subtract the disregard amount once. There are different disregard amounts for each year and for fulltime or parttime courses.

For example, the disregard fees for 2019  are

Year  

Full-time course

  Part-time course

2019 

 €3,000   

 €1,500

 

Restrictions

You can’t claim relief for fees funded by grants, scholarships or your employer. If you get partial funding, you must declare it to Revenue when you claim tax relief.

If you’ve already claimed tax relief for tuition fees and the fees are later refunded by the college, you must tell Revenue within 21 days of receiving the refund.

 

Undergraduate courses

To qualify for relief, an undergraduate course must:

  • be carried out in an approved college

  • last at least 2 academic years in duration

 

Postgraduate courses

To qualify for relief, a postgraduate course must:

  • be carried out in an approved college

  • last at least 1 academic year but no longer than 4 academic years

  • lead to a postgraduate award based on either a thesis or an examination

 

To claim relief on a postgraduate course, you must already have an undergraduate degree or equivalent qualification.

Postgraduate courses in publicly funded or duly accredited universities and institutions of higher education in non-European Union (EU) Member States also qualify for relief.

 

Payment of tuition fees

If you pay tuition fees in installments, you can claim relief on your tuition fee installments either:

  • in the tax year the academic year commenced

  • or in the tax year in which you paid the installment

 

If you claim relief for the tax year when the installment was paid, you must subtract then disregard the amount that applies to that year. It’s often more beneficial to claim relief in the tax year that the academic year commenced.

 

Alternatively, if you pay college fees in advance, relief can be allowed as follows:

  • If details of actual amounts due for each year are available, then that amount is allowed each year for the duration of the course. This is subject to the ceiling of €7,000 per year along with the disregard amount that applies.

  • If no breakdown of fees is available, the relief can be divided evenly over the duration of the course.

 

You can contact us or apply with Taxback.com here to find out for free if you're due tax back on tuition fees.

 

Retirement and Pensions

You can get income tax relief (at your highest income tax rate) against earnings from your employment for your contributions (including Additional Voluntary Contributions (AVCs)) to the following types of pension plan:

  • Occupational pension schemes

  • Personal Retirement Savings Accounts (PRSAs)

  • Retirement Annuity Contracts (RACs)

  • some overseas plans

 

Note: There’s no relief from USC or PRSI for employee pension contributions.

 

Tax relief for employee pension contributions is subject to 2 main limits:


Age-related earnings percentage limits

You can get tax relief on your pension contributions up to the relevant age-related percentage limit of your earnings in any year. This relief is only from the employment in respect of which the contributions are made.

 

The age-related earnings percentage limits are:

 

under 30: 15%

 

30-39: 20%

 

40-49: 25%

 

50-54: 30%

 

55-59: 35%

 

60 or over: 40%.

 

The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.

 

Personal Retirement Savings Accounts (PRSAs)

Tax relief for PRSA AVCs is based on the age-related percentage limit of the income from the employment in question as reduced by any employee contributions to the pension scheme relating to the employment.

You may pay a once-off or special pension contribution after the end of a tax year but before the following 31 October.

If you do you can choose on or before 31 October, to have the tax relief for the contributions allowed in the earlier tax year.

 

Overseas pension plans

If you’re coming (or returning) to Ireland, you can get tax relief for pension contributions made to pre-existing plans with a pension provider in another EU Member State.

Where the relief applies, the contributions to the overseas plan are treated as if they were made to an occupational pension scheme, PRSA or RAC, as appropriate.

 

Taxation of social welfare pensions

Social welfare pensions paid by the Department of Social Protection (DSP) are liable to tax but not USC or PRSI. The DSP gives Revenue the information on the taxable amount of these pensions.

How the tax is collected depends on whether you’re a PAYE taxpayer or self-employed. If you’re PAYE taxpayer, your annual tax credits and rate band on your Tax Credit Certificate (TCC) will be reduced to take account of your pension.

If you’re self-employed, you should include details of any social welfare payments on your Form 11 and pay the tax due when making your annual tax payment.

 

Taxation of private pensions

All private pensions and occupational pensions are taxable sources of income. They are liable to income tax, USC, and PRSI in the same way as employment income. Your pension provider will deduct the tax from each payment it makes to you.

 

Avoiding emergency tax on your private pension

Your pension may be paid by your former employer or through a pension company. To avoid paying emergency tax on your private pension, be sure to get a Tax Credit Certificate in the name of your pension provider.

A widowed or surviving civil partner may be getting a private pension from a deceased spouse's or civil partner's pension provider. If this is the case, to avoid paying emergency tax, you’ll need to get a Tax Credit Certificate in the name of the pension provider.

 

Taxation of foreign pensions

Some foreign pensions aren’t taxable in Ireland. These are foreign occupational and social security pensions that wouldn’t be taxable if you lived in the country that granted the pension. However if you have a foreign pension (including UK and US pensions) it will generally be counted as a taxable source of income in Ireland and will be liable for income tax, USC, but not PRSI.

If you’re a PAYE taxpayer, contact Revenue and inform them of your foreign pension. They’ll reduce the annual tax credits and rate band on your Tax Credit Certificate to take account of it. If you’re self-employed, you should include details of the pension on your Form 11 and pay the tax due when making your annual income tax payment.

 

Tax-exempt pensions

The following pensions are exempt from tax:

  • Wound and disability pensions and all gratuities granted in respect of wounds or disabilities under the Army Pensions Acts - except any part of the pension that not attributable to disability

  • Military gratuities and demobilisation pay granted to officers of the National Forces or the Defence Forces of Ireland

  • Pensions and other allowances payable to War of Independence veterans and their families

  • Magdalene laundry payments

  • Foreign occupational and social security pensions that would not be taxable if the recipient lived in the country that granted the pension

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

4. Tax Credits, Allowances and Reliefs

 

Tax Credits

Tax credits reduce the amount of tax you pay during the tax year. You’re automatically given certain credits and must claim others. You'll see them on your Tax Credit Certificate.

 

Tax Reliefs

Tax reliefs reduce the income on which you pay tax, which may result in a refund of tax paid and the amount of relief depends on which rate of tax you pay. If you’re paying tax at the higher rate of 40%, then your income is reduced by the relief and the balance is taxed at 40%.

Otherwise it's reduced by the relief and the balance taxed at the standard rate of 20%.

 

Tax Allowances

You may get a tax refund for specific expenses for items you need for work, like laundry expenses if you wear a uniform for your job. The value of a tax allowance will depend on whether it’s allowed at the highest rate of income tax that you pay or is restricted to the standard 20% rate.

 

For example:

Take a claim of €100. If you pay tax at 40% and you can claim it at the highest rate of tax you pay, it will reduce your tax by €40 (€100 x 40%).

If the highest rate of tax you pay is 20% or the relief is restricted to the standard rate, then the claim of €100 will reduce your tax by €20 (€100 x 20%).

 

Tax Exemptions

You may be exempt from paying tax on certain types of income, depending on your circumstances. 

 

 

List of Tax Credits, Allowances and Reliefs

You may be entitled to certain credits, allowances and reliefs to reduce you tax liability. We've detailed them below.

The Cycle to Work scheme

The Cycle to Work Scheme is a tax incentive scheme to encourage employees to cycle to and from work. Under the scheme, employers can pay for bicycles and relevant equipment up to a maximum value of €1,000 for their employees and you can pay this back through a salary sacrifice arrangement of up to 12 months.

The scheme means that you aren't liable for tax, PRSI or the Universal Social Charge on your repayments so can make a good saving!

Note: The scheme can be applied once every 5 years.

 

Taxsaver travel tickets

Taxsaver incentivises people to use public transport (including LUAS, DART, and Dublin Bus) to and from work by offering travel tickets at a reduced expense. If you want to take advantage of the scheme, it’s best to contact your employer and ask them to register (if they haven't done so already) at Taxsaver.ie.

Once registered, your company can order your ticket online. The cost of the ticket is taken directly from your salary and you can save between 31% and 52% on the regular price depending on ticket type and tax band. 

If you plan to claim tax expenses, remember that you’ll need to keep all relevant receipts and invoices as Revenue may need to verify them.

 

Personal Tax Credit

The personal tax credit is granted to all taxpayers but the amount you get varies depending on your personal circumstances.

Basically you'll get the Personal Tax Credit if you're resident in Ireland and how much you get depends on whether you're:

  • single
  • married or in a civil partnership
  • widowed or a surviving civil partner
  • separated
  • divorced or a former civil partner.

 

Single person

You can get this credit if you're single, separated, divorced or a former civil partner. You're also entitled to it if you want to be assessed under separate treatment as a married couple or civil partnership.

 

Married person or civil partner

You can get the credit if you're married or in a civil partnership and if you're:

  • jointly assessed
  • separated, divorced or a former civil partner and you pay enough voluntary maintenanceto maintain your spouse or civil partner

 

Widowed person or surviving civil partner

You're also due this credit if you're a widowed person or a surviving civil partner. The amount due to you depends on when your spouse or partner died and whether you have any dependent children.

You receive a higher tax credit in the year of bereavement. It's the same amount as the married person or civil partner credit.

You may claim the Widowed Person or Surviving Civil Partner with Dependent Children Credit for 5 years. This starts the year after your spouse or civil partner dies.

 

Table: Personal Tax Credit Rates 
Your status 2019
Single person €1,650
Married person or civil partner €3,300
Widowed person or surviving civil partner with dependent child(ren) €1,650
Widowed person or surviving civil partner without dependent child(ren) €2,190
Widowed person or surviving civil partner - year of death €3,300
Widowed parent - 1st year after death €3,600
Widowed parent - 2nd year after death €3,150
Widowed parent - 3rd year after death €2,700
Widowed parent - 4th year after death €2,250
Widowed parent - 5th year after death €1,800

 

Married or a Civil Partners Person's Credit

If you get married or enter a civil partnership, you and your spouse will be treated as single people for tax purposes that year. However, if the tax you pay as two single people is greater than the tax that would be payable if you were taxed as a married couple, you can claim the difference (in other words, you can claim a tax refund).

Refunds are due from the date of marriage and calculated after the following 31 December. So, if you get hitched in 2019, any refund will be calculated after 31 December 2019

You can read more about the tax treatment of married couples and civil partners here.

 

Employee Tax Credit

If you’re taxed under the PAYE system, you can claim an employee tax credit on your income, including:

  • wages

  • occupational pensions

  • Department of Social Protection (DSP) pensions

  • certain foreign pensions.

 

How much can I claim?

The amount you can claim will depend on your income and the maximum for 2019 is €1,650. If your yearly income is €8,250 or more you’ll be entitled to the full amount.

If your income is below €8,250 then the credit is capped at 20% of your income.

For example, if your yearly income is €5,000 this amount of credit is €5,000 @ 20% = €1,000

If you’re married/in a civil partnership and both of you have PAYE income, you can both claim the credit, however you can’t transfer the credit to your spouse or civil partner.

You only get one employee tax credit per year no matter how many jobs you have.

 

This credit can’t be claimed by:

  • proprietary directors, their spouse or civil partner

  • the spouse, civil partner or child of a person paying the income

  • the spouse, civil partner or child of a partner in a partnership

 

A proprietary director is a director who:

  • is the beneficial owner of a company

  • can directly or indirectly control more than 15% of the ordinary share capital of a company

 

Children of proprietary directors can claim the credit if:

  • their job qualifies in a Pay Related Social Insurance (PRSI) class

  • PAYE has been deducted from their income

  • the child gives all of their time to the job

  • they’re paid at least €4,572 per year

 

Earned Income Credit

The Earned Income Credit is a separate credit to the Employee Tax Credit in that it can also be claimed by people who are self-employed. Available from 1 January 2016, if your income qualifies for the Employee Tax Credit and Earned Income Tax Credit, the combined value of these credits cannot exceed the maximum of PAYE Credit.

The credit can't be transferred between spouses or civil partners. If your income qualifies for the Earned Income Credit and Employee Tax Credit, the combined tax credits can’t be more than €1,650.

 

Single Person Child Carer Credit (SPCCC)

This tax credit is €1,650 per year and will reduce the tax you pay by €31.73 per week. You may also be entitled to an increased rate band of €4,000 per annum. This is an additional €4,000 at the 20% tax rate. If you’re due the credit, then you’re automatically due the increased rate band.

This credit is for people looking after children on their own and came into effect on 1 January 2014. It replaces the One-Parent Family Credit which was abolished from 31 December 2013.

 

Who is it awarded to?

The credit is typically given to the person with whom the qualified child lives with for the majority of the year (over 6 mts). This person is called the primary claimant. However the primary claimant can give the entitlement to a secondary claimant who meets the qualifying conditions if the child lives with that person for more than 100 days in a year.

Only one parent can claim the SPCCC in a tax year.

 

You can’t claim the SPCC if you:

  • Are jointly assessed as a married person/civil partner

  • Are married/in a civil partnership (unless separated)

  • Are cohabiting

  • Are in a year in which you became widowed or a surviving civil partner and received the personal tax credit of €3,300. In this case you can claim in subsequent years.

 

To qualify as a primary claimant you must:

  • Live with the qualifying child or children for more than 6 months of the year

  • Be the child’s parent or person who maintains the child at their own expense for the whole or greater part of the year

 

If both parents have equal custody by court order, the credit is determined by which parent gets child benefit from the Department of Social Protection.

A child living away from home while attending college is considered a qualifying child if they’re still maintained by the claimant and live at home outside of term-time.

 

Secondary claimant

The primary claimant can give up their Single Person Child Carer Credit in favour of a secondary claimant but the child must live with the secondary claimant for at least 100 days in the year.

The secondary claimant must meet the same conditions except for the condition that the child lives with him or her for the greater part of the year. For the purpose of this limit a day can include the greater part of a day.

So, for example, if a child stays with the secondary claimant from Saturday morning until Sunday evening, this can be counted as 2 days

 

A qualifying child is:

  • born in the tax year or

  • aged under 18 at the start of the tax year or

  • if over 18 at the start of the tax year, is in full-time instruction at any university, college, school or other educational establishment

 

A qualifying child can also be someone over 18 who is permanently incapacitated either before age 21 (or after age 21 while they were receiving full-time instruction). There is an additional Incapacitated Child Tax Credit.

A qualifying child may be your own child, an adopted child, stepchild or any child you support and maintain at your own expense. However, foster children cannot be qualifying children.

If you surrender your credit to a secondary claimant, this arrangement will remain in place until you withdraw it and when you withdraw the credit, it will be restored at the beginning of the following tax year.

 

Can both parents claim a Single Person Child Carer Credit?

No. Only one credit for a qualifying child is available to the primary clamant. 

However, if you're a primary claimant with more than one qualifying child and you surrender your entitlement to the SPCCC, two or more secondary claimants can claim the credit provided they are caring for qualified children for more than 100 days in a year.

For example:

Mary has 2 children, Ray and David, and is a qualifying primary claimant. Both Ray and David live with their respective fathers, Jack and Peter, for more than 100 days in a year. Mary wants to relinquish her SPCCC. Both Jack and Peter can claim the credit as secondary claimants.

 

This tax credit is €1,650 per year and will reduce the tax you pay by €31.73 per week. You may also be entitled to an increased rate band of €4,000 per annum. This is an additional €4,000 at the 20% tax rate. If you’re due the credit, then you’re automatically due the increased rate band.

 

Home Carer’s Tax Credit

The Home Carer's Tax Credit is available to someone who cares for a dependent in their own home. It’s can be awarded to you if you’re married or in a civil partnership and jointly assessed for tax purposes. So for example, if you get married and are jointly assessed and one of you stays home to look after your child, then you may qualify.

 

To qualify:

  • Married couple/civil partners must be jointly assessed for tax

  • One spouse or civil partner works in the home caring for one or more dependents

  • The home carer’s own income is under €7,200

A reduced tax credit applies if the carer's income is between €7,200 and €10,200.

 

A ‘dependent’ in this case can be:

  • A child who qualifies for child benefit

  • Person aged 65 or over

  • Person with physical/mental disability requiring care

  • Relative by marriage or someone for whom you're legal guardian

 

So, for example if you’re married and you stay at home to look after your child in your own home, then you should apply for the tax credit.Speak to one of our friendly advisors at

 

For 2019, the Home Carer’s Tax Credit is €1,500 and if the home carer earns below or up to €7,200 in the tax year, the full tax credit may be claimed. If your income exceeds €7,200, the difference between income and €7,200 is calculated and then halved. The Home Carer's Tax Credit is then reduced by that amount.

Table: Rates in 2019 depending on your income
Income Tax Credit Reduction in Tax Credit
€7,200 €1,500 Full tax credit is due
€7,450 €1,375 €7,450 - €7,200 = €250 ÷ 2 = €125
€7,950 €1,125 €7,950 - €7,200 = €750 ÷ 2 = €375
€8,200 €1,000 €8,200 - €7,200 = €1,000 ÷ 2 = €500
€8,450 €875 €8,450 - €7,200 = €1,250 ÷ 2 = €625
€8,700 €750 €8,700 - €7,200 = €1,500 ÷ 2 = €750
€8,950 €625 €8,950 - €7,200 = €1,750 ÷ 2 = €875
€9,050 €575 €9,050 - €7,200 = €1,850 ÷ 2 = €925
€ 9,200 €500 €9,200 - €7,200 = €2,000 ÷ 2 = €1,000
€ 9,600 €300 €9,600 - €7,200 = €2,400 ÷ 2 = €1,200


 
If the home carer's income is €10,200 or more, then you can’t claim the tax credit.


When to claim?

You can submit a claim to Revenue for the Home Carer’s Tax Credit any time during the tax year. However you must make your claim for the credit within 4 years after the end of the tax year to which your claim relates. So, for example any claims for 2015 must be made by 31 December 2019.

Speak to one of our friendly advisors at www.taxback.com.chat or email info@Taxback.com for more information and to find out if you can claim.

 

How can I claim?

Firstly, you can find out if you’re owed the credit by applying for a free 4 year refund assessment here. Our team of experts can tell you if you can claim and if it’s the most beneficial tax treatment. Here is our own tax expert Barry Flanagan speaking about the credit and other insider tips:

 

Home Carer Tax Credit FAQs

Q. Can I claim both the credit and the increased standard rate band for dual income couples?

A. No but you can claim whichever is most beneficial to you.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

Q. If I'm granted the home carer’s credit one year but exceed the €10,200 the next year, can I still avail of the credit in that year?

A. The tax credit can still be granted for that year if:

  • the other conditions for the tax credit are met and

  • the credit was granted for the immediately preceding year

 

Q. Does the dependent relative need to live with me?

A. The dependent person normally should live with you and your spouse/civil partner in the tax year in order to quality for Home Carer's Tax Credit. However in some cases a dependent person who is a relative can be cared for outside your home.

If the person isn’t living with you they must live next door in a neighbouring residence or on the same property or within 2 km of your home. In addition, there must be a direct communication link between you (for example, a telephone line or alarm system).

 

Dependent Relative Credit

If you’re caring for a dependent relative you may qualify for the Dependent Relative Tax Credit. You can claim the Dependent Relative Tax Credit if you pay for the cost of maintaining:

  • A relative or relative of a spouse who can’t maintain themselves due to ill-health or old age

  • Widowed or surviving civil partner parent of yourself or your spouse or civil partner, irrespective of health

  • Your child or spouse’s child who lives with you and on whom you depend as a result of old age or ill health

 

Health expenses and caring for a dependent relative

UPDATE:  As of 1 January 2019, the prescription charge for medical card holders over the age of 70 will be reduced from €2 per item to €1.50 per item. Prescription charges will be phased out for people in emergency accommodation.

If you pay health expenses for a dependent then you may be entitled to claim relief on the cost. Before 2007 the main value of the Dependent Relative Tax Credit lay in the fact that you had to claim this credit to claim medical expenses for that relative, however this is no longer the case.

 

You can claim relief on expenses like:

  • Doctors' bills

  • Maintenance or treatment in hospital

  • Prescribed drugs and medicines

 

If the person lives in a nursing home and you contribute to the fees, you may be entitled to claim some of these expenses. The only requirement is that the hospital, nursing home or similar institution must provide 24-hour nursing care onsite.

 

What are the Rates?

The value of the credit depends on:

  • The cost of maintaining your dependent relative - the tax credit is the cost of maintenance up to €70 in 2019

 

  • If the income of your dependent relative exceeds €14,753 in 2018, no tax credit is due (the income limit was €14,753 in 2018, €14,504 in 2017, €14,060 in 2016, €13,904 in 2015 and €13,837 in 2014 and 2013). All of your dependent relative's income (for example, social welfare payments, pensions and deposit interest) is taken into account for income limit purposes.

 

If you want to claim the dependent relative or home care tax credits, then you should contact us at Taxback.com by emailing info@taxback.com or complete a DR1 form for a relative or parent or DR1 or DR2 for son or daughter and send to Revenue who will update your tax credits if you qualify.  

If you pay tax under the self-assessment system, you can claim the tax credit by completing the 'Dependent Relative' section on your annual tax return.

DR1

 

Dr2

Can I claim for health expenses and caring for a dependent relative?

If you pay health expenses for a dependent then you may be entitled to claim relief on the cost for these. Only the amount that cannot be reimbursed by a medical insurance company, HSE or other source can be claimed for tax relief purposes.

 

Table: You can claim relief on medical expenses like
Doctors' bills
Consultants’ fees
Maintenance or treatment in hospital
Prescribed drugs and medicines
Non-routine dental expenses
Treatment in a hospital or a nursing home
Speech and language therapy
Ambulance
Educational psychological assessments
Certain items for a child suffering from life threatening illness
Kidney patient expenses (up to a max amount)
Specialised dental treatment
Routine maternity care
In-vitro fertilisation

 

Table: The following, where prescribed by a doctor, qualify for medical expenses relief
Drugs and medicines
Diagnostic procedures
Orthoptic or similar treatment
Hearing aids
Orthopaedic bed or chair
Wheelchair or wheelchair lift
Glucometer machine for a diabetic
Engaging a qualified nurse in the case of a serious illness
Physiotherapy, chiropody/podiatry services or similar treatment
Cost of a computer where there is medical evidence that it's necessary to help a person with a severe disability to communicate
Cost of gluten-free food for coeliacs
If your dependent lives in a nursing home and you contribute to the fees, you may be entitled to claim some of the expenses. The only requirement is that the hospital, nursing home or similar institution must provide 24-hour nursing care onsite. There is no relief available for routine dental and routine ophthalmic care expenses.

 

Incapacitated Child Tax Credit

The Incapacitated Child Credit is for a parent or guardian of a child who is permanently incapacitated either physically or mentally and:

  • Became so before reaching 21 or

  • Is permanently incapacitated after 21yrs but while still in full-time education or training for a trade or profession for a minimum of 2 years

 

Just note that you can’t claim the credit if the child is fully maintained at public or charitable expense.


You can also claim the credit for:

  • A stepchild

  • Adopted child

  • Any child of whom you have custody, who you maintain at your own expense and is permanently incapacitated

 

You can claim also this credit for more than one incapacitated child. If the child is maintained by one parent only, this parent can claim the full amount of the tax credit. If the child is maintained by more than one person, then the tax credit is divided between them in proportion to the amount paid by each.

Qualifying Disabilities*
Cystic Fibrosis
Spina Bifida
Blindness
Deafness
Down Syndrome
Spastic paralysis
Certain forms of schizophrenia
Acute autism


*This list is not exhaustive.

In 2019, the Incapacitated Child Tax Credit is €3,300. You may also claim tax relief for medical expenses incurred by yourself or any other person.

To apply, you can use the Incapacitated Child Tax Credit claim form and submit this to Revenue or contact Taxback.com here. In some cases (where it’s not obvious that the child’s incapacity is of a serious and permanent nature),  you must submit a doctor’s certificate with your initial claim.

 

The certificate should state:

  • Date incapacity first arose

  • Degree and extent of the incapacity

  • If it’s a disability other than one of those listed above and whether the incapacity permanently prevents the child from maintaining his or herself


Tax relief on employing a home carer

It’s possible to claim tax relief on the cost of employing a carer for yourself or a family member – i.e. a spouse, civil partner, child or a relative, including a relation by marriage or civil partnership.

To qualify, you/family member must be totally incapacitated (meaning disabled and requiring a carer) for the complete tax year (January to December) in which you’re claiming the tax relief. However, the carer doesn’t have to be employed for the full tax year.

It’s important to note that you can’t claim tax relief for employing a carer if the carer only carries out housekeeper duties or if you’ve already been granted a Dependent Relative Tax Credit or an Incapacitated Child Tax Credit.

You may be asked by Revenue to get a medical certificate to confirm the nature of your disability but it isn't necessary to send one in with your application form unless you’re getting home nursing for a serious illness.

 

Home nursing

If you or a family member has a serious illness and you employ a qualified nurse, you can claim the relief but you must provide Revenue with the following:

  • Name, address, and qualifications of each nurse providing care

  • Receipts for all payments made to the nurses

  • A medical certificate from doctor (either your GP or consultant) stating the following:

1. Name and address of the person with the serious illness

2. The nature of that illness

3. Confirm that constant nursing care by a qualified nurse in the patient’s home is required

4. Cover the full period of time for which the tax relief is being claimed for home nursing

 

You can claim tax relief (at the highest rate of tax you pay) on the lower of the following 2 amounts:

  • The actual cost incurred or

  • The maximum deduction of €75,000

 

The maximum amount of relief available for employing a carer is €75,000 in 2019 (€75,000 also for 2018, 2017, 2016 and 2015 and €50,000 in 2014 and previous years). You must claim the relief each year.

You can get tax relief on the cost of employing a carer, less any amount recovered from the Health Service Executive (HSE). If two or more of you pay for the care, then the relief is divided between you in proportion to the amount each person paid.

 

How to apply

A PAYE taxpayer can apply for tax relief for employing a carer by completing form HK 1 (first page pictured below).

Your certificate of tax credits will be increased to include the relief due. This means that you’ll pay less tax each week from your salary. Alternatively, you can claim relief at the end of the tax year by submitting your P60 and that of your spouse or civil partner, if applicable, to your local Revenue office.

 

Older people's tax credits and reliefs

While you’ll still be liable to pay income tax in the normal way, if you’re aged 65 or over, you may be entitled to some extra tax relief.

Table: Tax exemption limits for people aged 65 and over
Status 2019
Single or widowed or surviving civil partner €18,000
Married or in a civil partnership €36,000
First two children €575 each
Subsequent children €830 each

 

Exemption limits are income limits below which no tax is payable.

You should inform Revenue if you believe that your yearly income will be less than these limits. They’ll then issue you a revised determination of your tax credits.

Even if your income is slightly above these amounts, you may be eligible for ‘marginal relief’. This means that, instead of going back into the normal tax system, you pay 40% on the amount by which your income exceeds your relevant exemption instead.

The point at which marginal relief ceases to be of benefit varies with your family circumstances and the tax credits to which you're entitled.

 

Home Renovation Incentive (HRI)

Owner occupiers of a main home or landlords of rental properties may be eligible to claim tax relief under the Home Renovation Incentive (HRI) Scheme.

HRI provides tax relief by way of an income tax credit at 13.5% of qualifying expenditure on repair, renovations, or improvement works on your main home or rental property by qualifying contractors.

You can claim tax relief on these works if they total over €4,405 (before VAT at 13.5%) per property. The jobs must be carried out anytime, by a qualifying contractor, from 25 October 2013 to 31 December 2018 for homeowners and from 15 October 2014 and up to 31 December 2018 for landlords.

Table: HRI Work you can claim for 

Extensions

New heating system

Insulation

Bathroom upgrades

Installing a stove

Attic conversions

Fitting new alarm systems

Solar panels

Plumbing

Plastering

Driveways

Conversion of residential premises into rental units

Tiling

Rewiring

Radon remediation work

Painting and decorating

 

Does the work still qualify if I get a grant?

Yes but not the full amount. The qualifying expenditure will be reduced by 3 times the amount of the grant.

 

So for example:

You pay €10,000 on upgrading insulation and receive €2,700 under the Better Energy Homes Scheme.

 

So, the €10,000 will be reduced by €2,700X3 or €8,100.

€10,000 less €8100 leaves €1,900

The €1900 has a VAT of €226

Under the scheme, you can claim a tax credit on €1900 less the €226

 The tax credit is: €1,674X13.5%=€225.99

 

 

Age Tax Credit

The Age Tax Credit is additional to the personal tax credit and may be claimed once you or your spouse or civil partner reaches the age of 65. To avail of this tax credit you will need to contact Revenue.

Table: Age tax credit 2019
Single or widowed or surviving civil partner €245
Married or in a civil partnership €490



Covenants

If you’re a higher rate taxpayer and you want to help support a person on a low income, it may be worthwhile to covenant the money. A covenant is a legally binding written agreement to pay to another person.

There is no limit if the person is permanently incapacitated and covenants are most effective when the recipient doesn’t have any taxable income.

 

 You can claim relief on covenants to:

  • One or more adults aged 65 or over. The relief you receive is restricted to 5% of your total income

 

  • Permanently incapacitated minors under 18 years of age who is not married or in a civil partnership

 

  • Permanently incapacitated adults

 

 

Conditions:

  • You must not receive any benefit in return for paying this amount

 

  • A Deed of Covenant must last for more than 6 years to qualify for tax relief

 

  • We recommend you make a covenant that lasts for a minimum of 7 years

 

 

  • You must not receive any benefit in return for paying this amount

 

  • The deed must be properly drawn up, signed, witnessed, sealed and delivered to the covenantee to be legally effective

 

  • You can't backdate a deed. A deed is only effective from the date it's made

 

  • If you're a beneficiary, you must have a Personal Public Service Number (PPSN) so you can get the payments. If you don't have one, you can apply for a PPSN by contacting your Intreo office

 

  • If you're the covenantor, you must deduct tax at the standard rate (20%) from the payment and pay it to Revenue

 

  • You must give details of the payment and tax deducted on a Form R185 - Certificate of Income Tax deducted to the covenantee each time you make a payment

 

The amount you covenant may be taxable in the hands of the recipient and it’s important to note that money covenanted to people receiving a non-contributory pension or means-tested allowance may affect their entitlement to the allowance.

You can pay any amount under a Deed of Covenant. However, only certain covenants qualify for tax relief.

To make a Deed of Covenant to another person you must complete the Deed of Covenant Form:

Otherwise, you can ask a professional adviser such as an accountant or a solicitor.

 

How much tax relief do you get?

If you're the covenantor, your relief depends on your rate of tax.

So if you pay tax at the higher rate (40%), your relief is calculated on the amount of the covenant at the difference between the higher rate of tax and the standard rate (20%).

And if you pay tax at the standard rate only, you don't get any tax relief on your covenant payments.

If you're the covenantee, (e.g. receiving the payment), you may receive a refund of the tax deducted by the covenantor where your total income is below the limit for paying tax. in thsi case your total income includes the covenant payments and any other source of income.

 

Documents to send to Revenue

If you're making covenant payments, the first time you claim for relief you need to send to Revenue:

  • Copy of the Deed of Covenant
  • Copy of Form R185 - Certificate of Income Tax deducted  

 

For following years, you must complete a Form R185 after each payment date and send a copy of this to your Revenue Office. Revenue will ensure you receive a repayment of tax if it's due.

If you're a PAYE employee, you can to submit a Form 12 to claim the relief. Alternatively, you can complete the Claim form for Deed of Covenant and send it into your local Revenue office.

If you're self-assessed, then you should include the details in your annual Form 11 return.

 

Covenantee

If you're receiving the payments, you should ensure you're registered for tax. If you're not registered, then please see the starting your first job section here.  This section will explain how you can register for tax.

You need to declare your covenant payments to Revenue. In the first year you should send:

  • A completed Claim Form for Deed of Covenant

 

  • Original Deed of Covenant

 

  • Completed Form 54 claims


  • Completed Form R185 you receive from the covenantor

 

  • Proof you received the payments

 

For following years, you need to send the Form R185 and a Form 54 every year that you receive payments.

Tax relief for rent

If you're renting private accommodation (in Ireland or outside the state) and pay income tax, you may be able to claim tax relief on part of your rent. You can claim this relief if you were already renting on 7 December 2010. If you weren't renting on that date and you subsequently entered into a rental agreement, you can't claim tax relief on your rent.

However, if you were renting on 7 December 2010, you'll continue to qualify for this relief even if you enter a different rental agreement after that date. 

Only the rent for private rented accommodation that you use as your sole or main residence will qualify for tax relief. This includes flats, apartments and houses.

You can't claim tax relief for rent paid to a local authority or a state agency or for rent paid under a lease agreement for 50 years or more.

People over 55 can claim tax relief at higher rates for rent paid for private rented accommodation. 

The relief is being phased out and 2017 will be its last year but you'll still have 4 years to claim for previous years. Email info@taxback.com to if you were renting on 7 Dec 2010 to find out if you can claim.

 

Deposit Interest Retention Tax

Deposit Interest Retention Tax (DIRT) is deducted from the interest payable on savings in banks, building societies, etc. If you or your spouse/civil partner are 65 or if you're permanently incapacitated, you may not be liable for DIRT if you're exempt from income tax.

If you're exempt from DIRT, contact your financial institution to ensure your interest is paid without a DIRT deduction.

 

Health Expenses

You can claim relief on the cost of many health expenses for yourself or for someone else as long as you paid for them and weren't reimbursed.

You receive tax relief for health expenses at your standard rate of tax, 20%. However, nursing home expenses are given at your highest rate of tax, up to 40%.

 

You can’t claim relief for:

  • Expenses repaid by insurance companies, the Health Service Executive (HSE) or any other body

  • Expenses you receive compensation for

  • Routine dental or ophthalmic (eye) care

 

Table: You can claim relief on medical expenses like
Doctors' bills
Consultants’ fees
Maintenance or treatment in hospital
Prescribed drugs and medicines
Non-routine dental expenses
Treatment in a hospital or a nursing home
Speech and language therapy
Ambulance
Educational psychological assessments
Certain items for a child suffering from life threatening illness
Kidney patient expenses (up to a max amount)
Specialised dental treatment
Routine maternity care
In-vitro fertilisation

 

Table: The following, where prescribed by a doctor, qualify for medical expenses relief
Drugs and medicines
Diagnostic procedures
Orthoptic or similar treatment
Hearing aids
Orthopaedic bed or chair
Wheelchair or wheelchair lift
Glucometer machine for a diabetic
Engaging a qualified nurse in the case of a serious illness
Physiotherapy, chiropody/podiatry services or similar treatment
Cost of a computer where there is medical evidence that it's necessary to help a person with a severe disability to communicate
Cost of gluten-free food for coeliacs
If your dependent lives in a nursing home and you contribute to the fees, you may be entitled to claim some of the expenses. The only requirement is that the hospital, nursing home or similar institution must provide 24-hour nursing care onsite. There is no relief available for routine dental and routine ophthalmic care expenses.

 

You should claim for any relief after the year has ended and wait for your P60 to arrive before claiming. If more than one person paid for health expenses, each person can individually claim their portion of relief.

Remember you can claim for expenses from 4 years back, so if you have expenses for previous years, you can claim them now!

If you’re married/in a civil partnership and jointly assessed, then you’ll share the relief if you’ve both paid tax.

It’s really important that you keep your receipts (for at least 6 years) if you’re claiming health expenses. While they’re not required when claiming, they may be at a later date if your claim is checked by Revenue.

If you paid healthcare in one year, you can claim the relief:

  • for the year you received the care

or

  • in the year you paid for the care

 

So, for example:

 

Say you have an illness in December 2016 and your health expenses total €500.

You decide to pay €250 in 2016 and €250 in 2017.

In this case you can either

 claim €500 for the 2016 tax year

or

claim €250 in 2016 and €250 in 2017

 

 

Nursing home expenses

You can claim relief on nursing home expenses at your highest rate of tax if:

  • The nursing home provides 24 hour onsite nursing care

  • The maintenance or treatment expenses incurred are in association with the services of a practitioner

  • The expenses are for diagnostic procedures carried out on the advice of a registered practitioner

 

Nursing Homes Support Scheme

Under the Nursing Homes Support Scheme (or Fair Deal Scheme) the Health Service Executive (HSE) assesses you on your savings, income and the value of your property.

The HSE then decides the contribution to the cost of the nursing home you’ll pay every week. The HSE also pays a contribution towards the cost of the nursing home. You can’t claim relief on the share paid by the HSE.

 

Additional nursing care

If you pay extra for additional nursing care beyond what’s normally provided, you can claim tax relief for these payments if below conditions are met:

  • Nurses are fully qualified

  • You can provide nurses' names, addresses, and qualifications if requested 

  • You can provide a medical certificate which:

       -states nature of your/other patient's illness

       -states you/patient needs additional nursing care

       -covers the full period for which you’re claiming additional care

  • you can provide receipts and breakdown for all payments to the nurses if requested by Revenue

  • Relief is available only for payments for nursing care and not for nurses' expenses

 

Receiving relief during the tax year

You can be granted relief on nursing home expenses during the tax year in certain circumstances. To request this, you can contact your local Revenue Office with details of your claim.

If you receive tax relief during the year, you must complete a Form 12 as usual after the year ends.

 

Diet expenses for coeliacs and diabetics

You can claim relief for certain food products if you’re:

  • a coeliac and must purchase gluten-free foods

  • diabetic and must purchase diabetic products

 

If you have special dietary needs, you must provide a letter from your doctor stating this. Remember to keep receipts for the gluten-free food or diabetic products. These receipts can be from supermarkets, health stores and other similar shops.

 

Healthcare for children

You can claim relief for additional health expenses if the healthcare is for a qualifying child (under 18 years of age/or child over 18 years in full-time education):

 

Educational psychologist and speech and language therapy

Relief can be claimed on the cost of associated with an assessment being carried out by an educational psychologist. You can also claim relief on the cost of speech and language therapy for a child. The therapy must be carried out by a qualified speech and language therapist.

 

Life threatening illness or permanent disability

If your child has a life threatening illness or a permanent disability you can claim additional relief.

To qualify, the child must require constant or regular hospital care. This care can be regular hospital attendance or other supervision appropriate to serious illness or disability. Your child doesn’t need to be permanently in hospital for you to claim relief. It’s important to note that you can’t claim relief on childcare costs for siblings of the patient while the parents or guardians attend the hospital.

 

Child oncology patients and children with permanent disabilities

If your child is receiving treatment for cancer (child oncology patients) or has a permanent disability, you can claim tax relief on the following as health expenses:

 

Table: Expenses for child oncology or permanent disability treatments

Telephone

Where a child oncology patient or a child with a permanent disability is being treated at home, you can claim a flat rate payment to cover telephone rental and calls where those expenses are incurred for purposes directly connected with the treatment of the child. The flat rate for telephone expenses is €305 (2019).

Overnight accommodation

Tax relief is allowable for parents or guardians of child oncology patients and children with permanent disabilities where the child is required to stay overnight in a hospital as part of their treatment and the parent or guardian is required to stay nearby. Relief is allowable on payments made to the hospital and/or hotel or bed-and-breakfast near the hospital for accommodation

Travel - The cost of  travelling (unlimited journeys) to and from any hospital in respect of:

  • patient and accompanying parents or guardians and

  • parents or guardians of the patient

Only where the trips are shown to be essential to the treatment of the child. There’s also a mileage allowance if you use a private car.

Hygiene products and special clothing

You can claim relief on hygiene products or special clothing (up to a maximum of €500) if they’re necessary for treatment.


Kidney patients

Kidney patients are entitled to a number of additional reliefs to the normal health expenses:

 

1. Hospital dialysis patients

You can claim relief on the cost of travelling to and from the hospital if you travel regularly for dialysis treatment. If you’re travelling in your own car you can claim relief at €0.29 per mile or €0.18 per km (2018).

 

2. Home dialysis patients

If you use a dialysis machine at home, you can claim additional flat rate relief for electricity, laundry and protective clothing, and telephone expenses as below.

Electricity Laundry and protective clothing Telephone
Table: Relief for home dialysis patients
2018-€1790 2018-€1935 2018-€305
2017 - €1,790 2017 - €1,935 2017 - €305
2016 - €1,835 2016 - €1,925 2016 - €305
2015 - €1,905 2015 - €1,925 2015 - €305
2014 - €2,100 2014 - €1,930 2014 - €305
2013 - €2,006 2013 - €1,935 2013 - €305

 

Chronic Ambulatory Peritoneal Dialysis (CAPD)

You can also claim flat rate relief for electricity and telephone expenses for a kidney patient being treated at home without dialysis.

Electricity Telephone
Chronic Ambulatory Peritoneal Dialysis (CAPD)
2018-€1,505 2018-€305
2017 - €1,505 2017 - €305
2016 - €1,505 2016 - €305
2015 - €1,505 2015 - €305
2014 - €1,660 2014 - €305
2013 - €1,585 2013 - €305

 

As well as health expenses, you can claim releif for certain Medical appliances for kidney patients:

Table: 

You can claim relief on the cost of purchasing, maintaining, and repairing medical appliances (that you’ve been advised to use by a registered practitioner) including:

Glucometer machines
Hearing aids
Orthopaedic beds or chairs
Wheelchairs or wheelchair lifts
Exercise bicycles
Computers, if necessary to solve communication difficulties for a person with a severe disability
False eyes
Wigs


The following appliances don’t qualify:

  • Cars for a disabled person

  • Construction work to facilitate a person with an illness or disability

  • Telephone installation, line rental or call costs

 

To clarify whether a device qualifies Revenue may request a certificate which states:

  • Nature of the patient's illness

  • That the appliance is used on a practitioner's advice

  • How the appliance helps treat the patient's ailment, injury, infirmity, defect or disability

 

Blind Person’s Tax Credit

If you have certain visual impairments you can claim the Blinds Person’s Tax Credit which is €1,650 for 2019 (for married couple or civil partners, where both spouses or civil partners are blind, the credit is €3,300).

To apply, you’ll need a certificate from an ophthalmic surgeon (a physician who performs eye surgery).

 

The certificate must state:

  • that your best vision doesn’t exceed 6/60 visual acuity in the better eye with corrective lenses

or

  • that the widest diameter of your visual field subtends an angle no greater than 20 degrees

and

  • if the visual impairment is permanent or temporary (if it’s temporary you’ll need a certificate for each year for which the credit is claimed. If it’s permanent, the tax credit remains indefinitely)

 

It’s important to note that parents can’t claim a Blind Person’s Tax Credit in respect of a child who is blind. But they can claim the Incapacitated Child Tax Credit.

 

Guide Dog Allowance

An additional allowance is available if you or your spouse to have a trained guide dog. In 2019 the allowance is €825 and you claim it at the standard rate of 20%. To claim the allowance you must have a letter from Irish Guide Dogs for the Blind confirming that you’re a registered owner.

 

Value Added Tax (VAT) Refunds

Refunds can also be claimed from Revenue for VAT paid on certain aids and appliances designed to help a blind person cope with daily functions.

 

This includes:

  • Specially adapted computer equipment

  • Braille books

  • Braille writing equipment

 

Health Insurance Tax Credit

You can also get a tax credit if you’re a member of an approved private health insurance scheme.

A lot of people don’t notice when they’re getting the credit  because it's taken at source as it’s generally granted directly by the insurance company and your premium is reduced by the amount of the tax credit.

There’s also a limit to tax relief on private health insurance premiums - €1,000 for each adult and €500 for each child. Relief applies to policies which are renewed or entered into on or after 16 October 2013 and is given at the standard rate of 20%. At Taxback.com we can let you know if you're due tax back on health insurance payments when you apply here.

 

There are some limited situations where Tax Relief at Source (TRS) doesn’t apply:

For instance, where your employer pays medical insurance premiums on your behalf. This is treated as a Benefit-in-Kind and PAYE, PRSI, and USC are due on the total amount. This means you will not benefit from the TRS on the medical insurance premium so you can make a claim directly to Revenue.

You can also get a tax credit for payments to longterm care insurance schemes. This operates in the same way as the health insurance tax credit.

 

Travelling abroad for treatment

It’s also possible to claim tax relief on the cost of medical treatment obtained outside the state.

If the qualifying healthcare is only available outside Ireland, you can claim reasonable travelling and accommodation expenses. In such cases the expenses of one person accompanying the patient may also be allowed if the condition of the patient requires it.

 

If the treatment is available in the state:

  • You can’t claim travelling expenses for this care

  • The practitioner (GP, consultant or dentist) providing care must be entitled to practice in the country

  • You can only claim for the cost of maintenance or treatment in a hospital, nursing home or clinic abroad if the hospital, nursing home or clinic provides access to 24 hour onsite care

If the patient is a child, the expenses of one parent are usually allowed. Both parents will be allowed on exception where it’s clear that both need to be with the child.

 

Dental and optical treatment:

No tax relief is available for routine ophthalmic and dental care including:

  • sight testing

  • provision and maintenance of glasses and contact lenses

  • scaling and filling of teeth

  • provision and repairing of artificial teeth and dentures

 

However, some non-routine opthalmic and dental treatments do qualify. The list of treatments and appliances that qualify for tax relief is added to from time to time. If you're undergoing a new procedure or availing of a new appliance, it's worth checking whether you can claim tax relief. 

Table: The following dental treatments do qualify for tax relief
Crowns
Veneers/Rembrant type etched fillings
Tip replacing
Gold posts
Gold inlays
Endodontics (root canal treatment)
Periodontal treatment
Orthodontic treatment
Surgical extraction of impacted wisdom teeth when it's undertaken in hospital
Bridgework

 

Med 2 form for claiming dental expenses

To claim relief for dental expenses, your dentist must complete a Med 2 Form like the one pictured below (a receipt for your dental expenses). If you receive treatment over more than one year, you’ll need a separate Med 2 for each year.

You don’t need to send your Med 2 Form to Revenue but you should keep it safe as it may be required if they need to check your claim. You can claim the dental expenses by claiming health expenses as usual and supplying the figure for dental expenses.

 

Tax relief on fees for 3rd level students

If you’re a 3rd level student you may be able to claim tax relief on tuition fees paid for approved:

  • Undergraduate courses

  • Postgraduate courses

  • Information technology (IT) and foreign language courses

 

You can claim tax relief as long as you have actually paid the fees, either on your own behalf or on behalf of another person.

Tax relief is given at the standard rate of 20%. For example if you have a number of kids undertaking qualifying courses you can claim relief on each course as there’s no limit on the number of individuals for whom you can claim.

 

From 2011 onwards:

  • The maximum amount of fees (including the Student Contribution) that can qualify for tax relief is €7,000 per person per course

  • Each claim is subject to a single disregard amount each tax year. This amount is taken away from your qualifying fees. You can't get relief on that portion of the fees starting from 2015 academic year onwards.

  • If you’re a full-time student there is no tax relief on the first €3,000 spent on tuition fees (including the Student Contribution) for the academic year starting from 2015 academic year onwards.

  • If you’re a part-time student there will be no tax relief on the first €1,500 spent on tuition fees (including the Student Contribution) for the academic year

  • If you’re claiming for more than one student, you’ll get full tax relief on tuition fees (including the Student Contribution) for the second or subsequent students

 

For tax years before 2011, you’re not allowed to claim tax relief on the student services charge (now the Student Contribution) and tax relief is available on qualifying tuition fees up to a maximum of €5,000.

 

You can’t claim tax relief on:

  • Examination or administration fees

  • Any part of tuition fees that met directly or indirectly by a grant, a scholarship or otherwise (i.e. if your fees are reimbursed by an employer)

 

Undergraduate courses

Tax relief is available for tuition fees paid for:

  • Approved full-time and part-time undergraduate courses in both private and publicly funded third-level colleges in the State or in any EU member state

  • Full-time and part-time undergraduate courses operated by colleges in any EU member state providing distance education in the State

 

Note: All courses must be for at least 2 years' duration and colleges and courses within the state must be approved by the Department of Education and Skills.

 

Postgraduate courses

Tax relief is available for tuition fees paid for:

  • Approved postgraduate courses in private and publicly funded colleges in the state

  • Postgraduate courses in a university or publicly funded college in another EU member state, including such colleges that provide distance education in the State

  • Postgraduate courses in a university or publicly funded third-level college in non-EU countries

 

Note: The person taking the course must already have a primary degree or an equivalent qualification. All courses must be for at least 1 academic year but not more than 4 academic years and must lead to a postgraduate award based on either a thesis or exam..

 

Information technology and foreign language training courses

Tax relief is available if the course:

  • is less than two years' duration

  • results in the awarding of a certificate of competence (not just certificate of attendance)

  • is approved by SOLAS

 

Note: Course fees must not be less than €315 and not more than €1,270 (i.e. the course fee and not simply an amount per annum).

 

Paying fees in installments

If you choose to pay fees in installments and at least one installment is paid in the tax year following the year you started the course, then the relief for fees relating to that academic year may be granted either:

 

  • in the tax year the course started

or

  • the tax year in which the instalment was paid

 

Note: Relief is only be granted in respect of amounts actually paid and subject to the maximum relief available in that academic year.

 

There is no specific form required to claim relief for tuition fees paid for third level education courses. You can use PAYE services to apply for relief for tuition fees by completing your Form 12.

 

Alternatively:

  • you can send a written claim to your  local tax office during the tax year, provided the fees are paid

or   

  • can claim the relief  on your tax return at the end of the year.  

 

If you receive any grant or payment towards the fees you must include this information when claiming the relief.

 

Artist's exemption

Income earned by writers, composers, visual artists, and sculptors from the sale of their works is exempt from tax in Ireland in certain circumstances.

Revenue determines that certain artistic works are original and creative works (recognised as having cultural or artistic merit). Earnings derived from these works are exempt from income tax from the year in which the claim is made. The maximum amount of income that can be exempted is €50,000.

However, an artist's exempt income is still subject to USC.

If you want claim an Artist's Exemption you must be resident or ordinarily resident and domiciled in an EU member state or in EEA State.

 

Revenue can make determinations in respect of artistic works such as:

  • Books or other forms of writing

  • Plays

  • Musical compositions

  • Paintings or other similar pictures

  • Sculptures

 

Your work must be original and creative with either cultural or artistic merit:

Cultural merit - its contemplation enhances the quality of individual or social life as a result of its intellectual, spiritual or aesthetic form and content.

 

Artistic merit - its combined form and content enhances or intensifies the aesthetic apprehension of those who experience or contemplate it.

 

Original and creative work-The term original and creative encompasses any unique work brought into existence for the first time by the use of its creator's imagination.

A nonfiction book or other piece of writing will be considered original and creative only if it’s an example of one of the following categories of literature encompassing the subjects of fiction writing, drama, music, film, dance, mime or visual arts and any related commentaries by artists:

Table: Examples of non-fiction work considered:
Arts criticism
Arts history
Arts subject works
Arts diaries
Autobiography
Belles-lettres essays
Biography
Cultural dictionaries
Literary translation
Literary criticism
Literary history
Literary diaries

 


And:

  • The essence of the work is the presentation of the author's own ideas or insights in relation to the subject matter and these ideas or insights are so significant that the work would be regarded as a pioneering work casting new light on its subject matter or changing the generally accepted understanding of the subject matter

 

or

 

  • the publication comes fully within the terms of reference of the Heritage Council including work that in its entirety, is a work of archaeology or a publication associated with items or areas of significant heritage value

 

or

 

  • it’s a publication that comes fully within the terms of reference of the National Archives Advisory Council and relates to archives concerning Ireland that are more than 30 years old and are based largely on research from such archives

 

 

The following types of work aren't regarded as original and creative:

  • A book or other piece of writing published primarily for students pursuing a course of study or people engaged in any trade, profession, vocation or branch of learning as an aid to professional or other practice in connection with the trade, profession, vocation or branch of learning

 

  • Article or series of articles published in a newspaper, magazine, book or elsewhere, except a book consisting of a series of articles by the same author connected by a common theme and therefore capable of existing independently in its own right

 

  • Plays written for advertising purposes that don’t exist independently in their own right by reason of quality or duration

 

  • Musical compositions written for advertising purposes and that don’t exist independently in their own right by reason of quality or duration

 

  • Adaptations, arrangements, and versions of musical compositions by a person other than a bona fide composer actively engaged in musical composition

 

  • Photographs or drawings (other than a set or sets of photographs or drawings that are collectively created for an artistic purpose) that are mainly of record, that serve a utilitarian function or that would not exist independently in their own right by reason of quality or by reference to their potential for inclusion as part of an art exhibition

 

  • Objects primarily functional in nature produced by processes other than by hand or objects produced by hand by people other than those actively engaged as bona fide artists in the field of visual arts

 

Payments to artists that are exempt from tax

If you received an Artist’s Exemption, you can also receive the following payments tax-free:

  • Bursaries paid directly to you by the Arts Council

  • Residencies when paid directly to the individual by the Arts Council for the purpose of producing a qualifying work

  • Cnuas payments made under the Aosdána Scheme

  • Payments from the sale of works that are considered eligible under the Artists Exemption scheme

  • Advance royalties

 

Advance royalties

If you earn advance royalties for the subsequent publication of a book or other piece of writing, you’ll have to lodge a claim with Revenue in the tax year you receive the royalties for them to be exempt from tax. When making your claim you’ll need to give confirmation from the publisher that the book will be published along with a draft copy of the work.

If you’re waiting for a claim to be granted, any tax liability that arises on the advance must be paid. If the claim is subsequently granted you may be entitled for a refund if appropriate. Advance royalties paid before the year of claim are not exempt from tax.

If you sell books online to the US, then you may be due tax back in the form of a royalty refund. You can apply for an estimate of your royalty refund here.

We get US royalty refunds for sportspeople, musicians, artists and actors so if you've been working or performing in the US on a P, O, B1 or B2 visa we can help you apply for a royalty refund.

If you earned US royalties during the past 3 years, you will have had up to 30% tax deducted from your earnings. That extra income could come in very handy for you so it's worth claiming it back. 

Look no further. Taxback.com will claim back most, if not all of the tax withheld from your US earnings as far back as the past 3 tax years if you weren’t a resident there during that time. 

 

Investment in Films

Film Relief is available to producer companies in the film and film production industry.  A company can use film relief as a credit against Corporation Tax (CT) and the amount due depends on the production costs of the qualifying film.

This credit will be extended until 2024. A new, short-term, tapered regional uplift commencing at 5% is also being introduced (subject to State aid approval) for productions being made in areas designated under the State aid regional guidelines.

 

Film Relief is 32% of whichever is the lowest of these:

  • eligible expenditure (including the cost of international cast and crew working in the State)

  • 80% of total film production costs

  • €70 million

This results in a maximim tax credit of €22.4 million per project.

 

Maintenance payments and relief

There are 2 types of maintenance payments:


1. Legally enforceable maintenance payments

These maintenance payments are made under a court order, deed of separation, trust or covenant. They must be made when you’re considering or going through separation or divorce and a number of rules apply to these payments including:

  • your spouse must not deduct tax on any payments made to you

  • you must pay tax on all payments received

  • you and your spouse will be taxed as individuals unless you choose otherwise

 

You’ll need to pay PRSI on any maintenance payments you receive from your spouse or civil partner. If you earn PAYE income, you may also have the choice to pay the tax due on your maintenance payments throughout the year. This can be done by reducing your tax credits and rate band on your Tax Credit Certificate.

If a maintenance payment is the only income that you have, then you must pay the tax and USC due under self-assessment. If you’re making maintenance payments, it’s possible to get USC relief on the payments. By choosing to be jointly assessed for tax, the maintenance payments are ignored for tax and USC purposes. If you both have income other than income from maintenance payments, separate assessment will apply.

 

2. Voluntary maintenance payments

These payments are made outside of a court order and aren’t legally enforceable. These payments aren't taxable or liable for USC and you can claim the single person’s tax credit against any other income you have. If you’re paying voluntary maintenance payments you don’t get tax or USC relief on the payments.

 

Payments for the benefit of your children

Any payments you receive for the benefit of your children are not taxable or liable to USC. And if you pay maintenance for the benefit of your children you don’t get tax and USC relief on this.

 

Rent-a-Room Relief

Rent-a-room relief allows homeowners to earn tax-exempt rental income from private tenants. By renting out a room in your house you can earn tax-free income as long as it doesn’t exceed €14,000 in a tax year (limit was €12,000 in 2016 and 2015 and €10,000 in 2014 and previous years).

A self-contained unit, such as a basement flat or a converted garage attached to your home can also qualify for this relief.

 

To qualify for rent-a room relief:

  • Your home must be located in the state

  • You must occupy it as your sole residence during the year of assessment (it’s your home for the greater part of the year)

  • You don’t need to own the property – you could be a tenant and be subletting to someone else (you may need to check if your landlord allows sub-letting)

 

You will not qualify for the relief if:

  • Your gross income from rent and related services is over €14,000 (as of 2018)

  • You’re renting the room in your home to your son or daughter (there’s no restriction in the case of other family members)

  • You’re an employee or office-holder in a company and the company pays you to allow clients to use the room in your home on an occasional basis

  • You rent the room to short-term guests

 

You can't claim relief against income received for the use of the room(s) from:

  • your child or civil partner

 

  • an employer

 

  • an employee

 

  • short-term guests, including those who book accommodation through online booking sites

 

If you qualify for rent-a-room relief, the income you get from renting out the room is not liable to PRSI, the Universal Social Charge or income tax. 

You can use the Revenue Online Service to enter the amount of exempt income on your Form 11 if you're self-assessed. You must use myAccount to enter the amount of exempt income on your Form 12 if you pay tax through the Pay As You Earn (PAYE) system. You'll then receive the relief due.

There's a 4 year time limit to claim relief. This is important if you were paying tax all along on your rental income which should have been exempt.

 

What type of residence qualifies?

Sole or main residence

Your main residence is your home for most of the year and where friends would expect to find you. You don't have to own the property to claim the relief. The room or rooms must be in a residential property that is located in Ireland and it must be your main residence during the tax year.

 

Self-contained unit

The rented room/rooms can be a self-contained unit within the house, such as a basement flat or a converted garage. If this unit isn't attached to the property it won't qualify for the relief.

 

Business use or guest accommodation

Your tenants must use the room on a longterm basis. You can't claim relief on rooms that are used for business purposes.

Short-term stays provided through bed and breakfasts, a guesthouse or online booking sites don't qualify for relief.

 

Why you might opt out of rent-a-room relief

You can’t deduct expenses from your rental income while claiming rent-a-room relief. However, depending on the circumstances, it might be worth your while to opt out of in a particular year to offset expenses against rental income and avail of wear and tear allowances.

To opt out of the rent-a-room relief in a particular tax year, you must notify Revenue in writing, on or before the return filing date for that tax year. If you make an annual tax return, you can opt out by marking the relevant box in the ‘Exempt Income’ section of the return, otherwise you can write to your tax district to say you don’t wish the relief to apply.

You can contact us at info@taxback.com to discuss if it's better for you to opt out.

 

What lets qualify for relief?

The relief applies only to residential tenancies and not to short-term guest arrangements. So for example, you’ll be covered if you’re renting a room to a student for the academic year or for a one-month course. But taking in guests for a short breaks won’t qualify, such as letting out a room on Airbnb for a week.

If you normally rent out the room for the academic year and you rent it out for short breaks during the summer as well, you must identify the income you get from the short rentals separately from the income that qualifies for rent-a-room relief when making your tax return to Revenue.

 

Charitable Donations in Ireland

From 2013 onwards tax relief in respect of the charitable donations made is given to the charity organisation rather than the individual who made the donation.

If you make a charitable donation, tax deductions (granted at a rate of 31%) will be applicable for the amount you donate. However, instead of the person who made the donation gaining from the tax deductions, the charity will get the benefit.

Simply put, the tax you paid on the donation can be claimed by the charity. So for example, the total figure that the charity will receive on a donation of €500 is €725 (a benefit of €225).

An annual limit of €1 million per individual can be donated under the scheme.

Charities are required to obtain certificates from their donors confirming their PPS numbers, eligibility of the donation, and the fact that the tax they’ll pay for the year will be at least equal to the relief due to the charity.

Note: Relief will be restricted to 10% of the donor's annual income if there is a connection between the donor and the approved body.

 

Rules for donations to approved bodies (an eligible charity, educational institutions or body approved for Education in the Arts by the Minister for Finance) including:

  • It must be in the form of money or designated securities (quoted shares and debentures) or a combination of both

  • It must not be repayable to the donor

  • It must not benefit the donor or anyone connected with the donor

  • It must not be a condition or connected with any arrangement involved in obtaining a property other than by way of a gift from the donor to the approved body

 

You’re connected with an approved body at the time you make a donation if:                                                             

  • You’re an employee or member of that body

 

  • You’re a member of another approved body connected with the first approved body

 

 

Sportsperson relief

You may be able to claim tax relief if you’re a retired sportsperson.

Table: You may qualify for this relief if you’re a retired:
Athlete
Badminton player
Boxer
Cricketer
Cyclist
Footballer
Golfer
Jockey
Motor racing driver
Rugby player
Swimmer
Tennis player 
Squash player

To qualify for this relief, you must:

  • Have permanently finished or retired from that profession

  • If you retire on or before 31 December 2013, you must be resident in Ireland in the year of retirement

  • If you retire on or after 1 January 2014, you must be resident in Ireland, a European Union (EU) state, a European Economic Area (EEA) state, or a European Free Trade Association (EFTA) state at the time of retirement

 

The tax relief applies to earnings directly from sport, such as wages or prize money and income earned for personal appearances or interviews doesn’t qualify.

 

How much tax relief you’ll get

If you retired on or before 31 December 2013, the tax relief is calculated by allowing  a deduction of 40% against your total earnings (before expenses). Revenue will allow this tax relief for up to any 10 of the previous tax years for which you were resident in Ireland.

If you retire on or after 1 January 2014, the 40% deduction is based on your income in the year of retirement and preceding 14 years of assessment.

You must claim this relief within 4 years from the end of the year when you're retired and submit this on a Form 12.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

5. Tax credits and Reliefs 2

 

Exemption of Statutory Redundancy Payments

If you’re getting redundancy, part of it may be tax-free, this includes the following payments:

  • The statutory redundancy lump sum

  • Payment made on account of death, injury or disability, up to a maximum lifetime tax-free limit of €200,000

  • Certain payments made by employers to employees arising from employment law rights claims

 

The following payments aren’t exempt from tax but may qualify for some tax relief – see ‘tax-free entitlements’ below:

  • Non-statutory redundancy payments paid by your employer that exceed the statutory redundancy payment. This is known as an’ ex-gratia’ payment.

  • Payment in lieu of notice (however, if your contract of employment provides for a payment of this kind on termination of the contract, these tax-free entitlements don’t apply and you pay tax and PRSI in the normal way.

 

Tax-Free Entitlements

On a redundancy or retirement payment, you’re entitled to one of the following tax exemption options, whichever is higher:

 

1.Basic exemption

The Basic Exemption is €10,160 plus €765 for each complete year of service. (Not including statutory redundancy which is tax-free.)

The following can be counted towards a full year's work:

  • time worked before and after a career break
  • a period of job-sharing or part-time work
  • for group companies, all work carried out in Ireland

Note: If you have taken a career break the length of the break cannot be counted.

2. Basic Exemption plus Increased Exemption

An additional €10,000 called the Increased Exemption is also in certain circumstances:

  • If you haven't received a tax-free lump sum in the past 10 years and won’t be getting a lump sum pension payment now or in the future

  • If you’re in an occupational pension scheme, the Increased Exemption is reduced by any tax-free lump sum from the pension scheme you may be entitled to

 

3. Standard Capital Superannuation Benefit (SCSB)

This is an additional relief that typically benefits higher earners and long service. It can be used if the following formula gives a larger amount greater than the Basic Exemption or Basic Exemption plus Increased Exemption:

 

The Formula for SCSB:

The SCSB takes the average annual earnings over the previous 3 years (or whole period of service if less than 3 years) and multiplies this figure by the number of years service, then divides this by 15 and subtracts the lump sum superannuation payment received or that may be receivable.

 

For example:

 Say you were made redundant in 2014 after 20 years' service and received a lump sum of €100,000 which is your first lump sum.

 

You also got a lump sum of €20,000 from your pension scheme.

Your pay for the last 3 years before the date of leaving work was €180,000.


The amount of the lump sum which is exempt from tax is the higher of the following 2 calculations:

The Basic Exemption is: €10,160 + €15,300 ( €765 x 20 years) = €25,460

There is no Increased Exemption as the pension scheme lump sum of €20,000 is greater than €10,000

The Standard Capital Superannuation Benefit (SCSB) is: €180,000 ÷ 3 x 20 ÷ 15 - €20,000 = €60,000

 

The taxable amount of your lump sum is therefore €40,000 (€100,000 - €60,000).

As the above example shows the SCSB tax relief of €60,000 is a higher amount of tax relief than the Basic and Increased Exemptions of €25,460.

 

 

Calculation of tax

A certain amount of your redundancy payment is tax-free and the balance will be taxed. This is taxed as part of the current year's income.

The amount of your lump sum that is subject to tax is not subject to social insurance (PRSI) but the Universal Social Charge may be payable.

 

How to apply

Your employer is obliged to deduct tax from all your income but they may take account of the basic exemption, that is the €10,160 plus €765 for each year of service.

Revenue may inform the employer about the correct amount to be treated as tax-free and the rate of tax to be applied to the rest. If this doesn’t happen or if you end up paying too much tax, you should contact your regional Revenue office to claim a refund.

You must declare the fact that you received such a lump sum on your annual return of income to Revenue.

 

Service Charges

This tax relief was abolished in 2011 and was available if you paid service charges to a local authority for water, refuse or sewage service.

You can’t claim tax relief on service charges paid from 2011 onwards. If you haven’t yet claimed for service charges paid in 2010 or previous years, it’s too late to put in a claim, as this had to be done within 4 years of the end of the relevant tax year.

 

Tax Relief for Revenue Job Assist allowance

Revenue Job Assist was for unemployed people out of a job for more than 12 months. This, along with the Employer Job Incentive Scheme can’t be claimed for employment that began on or after July 1 2013. Tax relief under Revenue Job Assist is still available for certain jobs started on or before 30 June 2013 until the end of their natural lifecycle.

It’s an allowance that’s deducted from your total income to arrive at your taxable income. You may also claim an additional allowance for each qualifying child. You receive a marginal tax relief for each of the 3 years after you took up your job. You can start the 3 years in the year you took up the job or in the following year. If you qualify for Revenue Job Assist and haven't claimed it you should contact your Revenue office.

 

Allowance for Seafarers

If you’re at sea on a voyage to and from a foreign port you may claim the seafarer’s allowance. The allowance is also available to those servicing drilling rigs. 

You’re entitled an allowance of €6,350 available at the highest rate of tax you pay and this is set against your seafarer income. You can’t use the allowance against any other income.

 

To qualify you must:

  • Be at sea for at least 161 days in the year

  • Work wholly on a ship while on an international voyage

  • Not be employed in the public sector

  • Not have claimed Split-Year treatment in respect of the income earned

  • Be on a voyage that begins or ends in a port outside Ireland

 

For this purpose a sea-going ship is a ship (other than a fishing vessel) that’s only used to carry passengers or cargo for payment.

-It must be registered in the shipping register of a European Union (EU) Member State

-A rig or platform that is situated in any maritime area is regarded as a port

-You’re considered as being absent from Ireland for a day if you’re absent at midnight

 

You must claim the allowance in writing together with a confirmation letter from your employer and send to Revenue.

 

Fisher Tax Credit

The Fisher Tax Credit is €1,270 per year and you can offset it against your total income, that is, income from fishing and other sources. You can claim the Fisher Tax Credit if you meet the following conditions:

  • You’re a PAYE or self-assessed taxpayer

  • You’re resident in Ireland

  • You spend at least 80 days sea-fishing

  • Your fishing vessel is licenced by a European Union (EU) Member State and registered on the EU Community Fishing Fleet

 

If you’re a part-time fisher you’ll be eligible for the credit providing you satisfy the above conditions. You can’t claim the Seafarers' Allowance in the same year as the Fisher Tax Credit.

8 hours minimum with a 24 hour period qualifies as a day at sea.

 

A fishing trip is anytime you leave port to fish and ends when you return to port. If you return due to distress only, this will not be deemed a return provided you resume the trip again.

Fishing for any kind of fish found in the sea, including crustaceans and molluscs. It doesn’t include salmon, freshwater eels or aquaculture animals. Fishing solely for scientific, training or dredging purposes doesn’t qualify.

 

Trade Union Subscriptions

This relief was abolished in 2011.

 

Taxation of social welfare payments 

Your social welfare payment may or may not be deemed taxable. Even if your payment is taxable, you may not actually have to pay tax on it.

This can happen if your social welfare payment is your only source of income as you may not pay tax if your tax liability doesn’t exceed your tax credits. Universal Social Charge and social insurance (PRSI) isn’t due on social welfare payments.  

You can view a list of welfare payments that aren't taxable here.

If you have a social welfare payment along with another source of income, you may have to pay tax on it. In this case, your taxable social welfare payment is added to any other income and you’re taxed on the total amount. Your non-social welfare income will determine how tax due is paid.

If the income isn’t taxed through the PAYE system, for example, if you’re self-employed, have a pension from abroad or investment income, then you’re classed as a self-employed person and tax is payable annually by 31 October each year.

 

Social security pensions from abroad

If you have a social security pension from abroad, it’s generally taxable in Ireland. The tax is payable each year in a tax return unless you have a source of income that is subject to PAYE.

Certain foreign pensions that would be exempt from tax if you were resident in the country paying the pension, are however also exempt from tax in Ireland.

 

Illness and Injury Benefit

These are generally taxed by your employer and other social welfare payments are taxed by reducing your tax credits and rate band. If you’re off work and in receipt of illness benefit or your employer gets it on your behalf, then tax will be collected through the PAYE system. You don’t need to pay USC or PRSI on the payment.

Employers should adjust for changes to their PAYE procedures to account for the Illness or Injury Benefit paid (increases for qualified children aren’t taxable). They do this by including the taxable amount of Illness or Injury Benefit with the employee’s earnings. The Department of Social Protection will notify employers of the amount of taxable Illness or Injury Benefit and when it started.

 

Jobseeker’s Benefit and One-Parent Family Payment

If you work and receive Jobseeker’s Benefit (JB), the taxable part of your JB is collected by adjusting your tax credits and standard rate cutoff point. No PRSI or USC is payable.

Jobseeker's Benefit will be extended to self-employed people (in late 2019).

The earnings disregard for the One-Parent Family Payment and the Jobseeker's Transition payment will increase by €20 per week, from €130 to €150 per week (from 28 March 2019).

Social welfare payments that are taxable

Jobseeker's Benefit is typically taxable, however, the first €13 each week is exempt from tax. Jobseeker's Benefit given to short-time workers is not taxable. Any increases for qualified children payable with Jobseeker's Benefit, Illness Benefit, and the Occupational Injuries Scheme (Injury Benefit, Disablement Pension and Incapacity Supplement) aren’t taxable.

Other than the cases above, if your social welfare payment is taxable, any increase in your payment for your adult dependant and child dependants is also taxable.

 

Guardian payments are taxable

A guardian's payment is regarded as the beneficial property of the child and is therefore assessable against their income (if any), not against the income of the person getting the guardian's payment.

Table: Social Welfare payments/schemes that aren’t taxed
Back to Work Family Dividend
Child Benefit
Disability Allowance
Disablement Gratuity (lump sum payment)
Domiciliary Care Allowance
Farm Assist
Family Income Supplement
Fuel Allowance
Household Benefits Scheme
Jobseeker's Allowance
Jobseeker's Benefit (paid to systematic short-term workers)
Jobseeker's Transitional payment
Pre-Retirement Allowance
Supplementary Welfare Allowance
Back to work allowance
Back to work Enterprise Allowance
Back to Education Allowance
Vocational Training Opportunities Scheme
Early Childhood supplement

 

Table: Payments/schemes that are taxed
Adoptive Benefit
Blind Pension
Carer's Allowance
Carer's Benefit
Constant Attendance Allowance (payable with Disablement Pension)
Deserted Wife's Benefit
Deserted Wife’s Allowance
Death Benefit Pension 
Disablement Pension (except for child increases)
Guardian's Payment (Contributory) (on child's income)
Guardian's Payment (Non-Contributory) (on child's income)
Health and Safety Benefit (since 1 July 2013)
Illness Benefit (except for child increases)
Invalidity Pension 
Incapacity Supplement (taxable except for child increases)
Jobseeker's Benefit and Short-Term Enterprise Allowance (taxable first €13 per week excluded)v
Injury Benefit (taxable except for child increases)
Maternity Benefit (taxable since 1 July 2013)
One-Parent Family Payment
Partial Capacity Benefit
Paternity Benefit
State Pension (Contributory)
State Pension (Non-Contributory)
Widow’s, Widower’s or Surviving Civil Partner's (Contributory) Pension
Widow’s, Widower’s or Surviving Civil Partner's (Non-Contributory) Pension

 

Maternity Benefit

Maternity Benefit, Paternity Benefit, Adoptive Benefit , and Health and Safety Benefit are all taxable but not subject to the Universal Social Charge and PRSI. How much tax you’ll pay on these benefits will depend on your circumstances and any tax reliefs and credits you’re claiming. The Department of Social Protection will pay the benefit without any deduction of tax but will notify Revenue of the amount to be counted for income tax purposes.

If you were on Maternity Benefit up to and including 30 June 2013, you could be entitled to a tax and PRSI refund. If your Maternity Benefit was paid to your employer and your employer continues to pay your normal weekly wage then you should check if this is the case.

If this is the case you can contact revenue to request an MB21 Statement for proof of maternity leave, which you should then forward to your tax office to get a tax refund. To get a PRSI refund, you should complete the Refund of PRSI Contributions Application Form and send it to the PRSI Refunds Section.

Read more about Maternity Benefit and tax here.

 

Maternity Benefit

If you pay tax through the PAYE system you’ll  be in one 3 categories:

 

1. You’re paid your full or partial salary by your employer and Maternity Benefit is paid directly to them

In this case Revenue will reduce your tax credits and rate band to arrive at the tax payable on Maternity Benefit. Your employer will receive a revised Tax Credit Certificate and deduct tax, USC, and PRSI on the difference between the salary paid and Maternity Benefit.

 

2. You’re paid your full or partial salary by your employer and Maternity Benefit is paid directly to you

Revenue will reduce your tax credits and rate band and your employer will only deduct tax, USC, and PRSI on the exact salary paid by them.

 

3. You don’t get any salary  on maternity leave and your Maternity Benefit is paid directly to you

In this case, Revenue will reduce your tax credits and rate band to account for the tax payable on your Maternity Benefit and send a revised Tax Credit Certificate to your employer. If your only income is Maternity Benefit you’ll probably pay very little or no tax (since your total tax credits will probably exceed your total tax liability).

If you’re due any pay on the usual payday, you may contact your employer to request repayment of any tax that may be due. Alternatively, when you go back to work after maternity leave, any refund of tax due can be calculated then.

 

Foster Care Payments

If you foster a child with Tusla, The Child and Family Agency responsible for finding suitable foster parents, the allowances you receive are exempt from taxation under the Finance Bill 2005. This means that the money you earn isn’t classed as income when applying for certain benefits and will not affect your ability to receive disability allowance, disability benefit, unemployment assistance or a medical card.

 

Approved Profit Sharing Schemes

Approved Profit Sharing Schemes allow employers give their employee shares in the company up to a maximum value of €12,700 per year tax-free. However, you must pay USC and PRSI on the value of the shares. Approved Profit Sharing Schemes are subject to certain conditions set out in legislation and administered by the Revenue Commissioners.

In Ireland, employees can get share options from their company that may be 'tax free' or 'tax efficient'. There are 2 main ways:

  • Approved Profit Sharing Schemes

  • Stock Options

 

If the scheme meets certain conditions, an employee pays no tax on shares up to a maximum value of €12,700 per year. The employer must hold the shares for a period of time (called the ‘retention period’ - generally two years from the date on which they were appropriated) and the employee must not dispose of the shares before 3 years.

 

If you dispose of shares before this time, then you’re liable to pay income tax on whichever is the lower of the following:

  • the market value of the shares when they were given to you

or

  • the value of the shares at the time of sale

 

Approved Profit Sharing Schemes are subject to a number of conditions that should be checked with the Revenue Commissioners.

 

Employee Share Ownership Trusts (ESOT)

An ESOT is usually set up in parallel with an Approved Profit Sharing Scheme (APSS). The company makes payment to the ESOT to buy shares to distribute to its employees and can make tax deductions for the expense. Most in Ireland have been set up by ‘semi-state’ bodies.

 

Stock options in your employer's company

Revenue-approved savings-related share option schemes allow you to save for and purchase share options in your employer's company tax effectively. You should ask Revenue and your employer what rules apply to your share options and when you’re liable to pay tax.

 

Employment and Investment Incentive (EII)

This is a tax relief incentive scheme that provides tax relief for investment in certain corporate trades and allows an individual investor to obtain income tax relief on investments. The scheme replaced the Business Expansion Scheme (BES) and was announced by the Minister for Finance in his Budget 2011 speech and has been approved by the European Commission.

The EII scheme is open to anyone who pays income tax and is living in Ireland and the smallest investment is typically €5,000 but if you want to be more adventurous you can invest up to €150,000 per annum. An EII investor should expect to receive their investment back, with a premium, after 3 to 5 years.

 

You can claim tax relief on your investment when certain conditions are met. The relief is split into 2 tranches:

  • 30/40 on receipt of an EII 3 certificate in the year of investment (relief is initially available to an individual up to a maximum of 30% of the amount invested)

  • 10/40 on receipt of an EII 3A in the fourth year after the initial investment

A further 10% tax relief is available where it has been proven that employment levels have increased at the company at the end of the specified period (3 years) or where evidence is provided that the company used the capital raised for expenditure on research and development. The remaining 10% of the EII investment is available upon the meeting of conditions in the fourth year after the EII investment, which are:

  • An increased number of qualifying employees;

And

  • An increase in the wages paid by the company to the qualifying employees by at least the wages of one qualifying employee

Or

  • An increase in the companies R&D expenditure

 

There are four criteria which must be met at the time of share issue for a company to be able to qualify for the EII 3:

1. Be a micro, small or medium sized enterprise
2. Not be regarded as a firm in difficulty
3. When the initial EII investment is received, the company must meet one of the following conditions:

  • has not operated in any market
  • it is trading for less than 7 years, or the investment under EII is required to fund a new product or enter a new geographical market and the amount of the investment required under EII is greater than 50% of its average annual turnover for the preceding 5 years

4. When any follow-on EII investments are being raised, these investments are only eligible for relief where the possibility of follow on EII investments was foreseen in the undertaking's original business plan (being the business plan first used to raise financing under BES, SCS, SURE or EII).

 

Companies will issue ordinary shares to you for the amount you invest. You must hold those shares for at least 4 years.

 

Start Your Own Business Relief

If you’re unemployed for at least 12 months and decide to start your own business, you may qualify for this relief. The Start Your Own Business Scheme offers an exemption from income tax up to a max of €40,000 for 2 years.  

The relief applies to income tax that would be payable on your profits and doesn’t extend to USC or PRSI so you’ll still need to pay this on any profit. The scheme runs from 25 October 2013 to 31 December 2018.

 

To qualify, you must be unemployed for 12 months and in receipt of any (or a combination) of the following for 12 months or more:

  • Jobseeker's Allowance

  • Jobseeker's Benefit

  • One-Parent Family Payment

  • Partial Capacity Payment

  • Credited PRSI contributions

 

If you were employed for a time but lost your job and returned to the jobseeker’s payment, you can qualify (as long as the two jobseeker claims are not separated by more than 12 months and your total claim is more than 12 months).

 

Start-up Refunds for Entrepreneurs (SURE)

The Start-Up Refunds for The Start-Up Refunds for Entrepreneurs (SURE) scheme replaced the Seed Capital Scheme and is a modest tax incentive scheme for those looking to set up a new company who were previously in PAYE employment or were recently unemployed. The SURE scheme provides tax relief in the form of a refund of PAYE tax paid by claimants of up to 41% of the capital invested in the new business.

 

To qualify, you must:

  • Setup a new company carrying on a new qualifying trading activity

  • Mainly have been earning Pay As You Earn (PAYE) income in the previous 4 years

  • Take up full-time employment in the new company as a director or employee

  • Invest cash in the new company by purchasing new ordinary shares  

 

There are a number of specific conditions that the individual and the companies must meet in order to qualify for this relief. For more information on the qualifying conditions see the SURE manual.

 

Start-up Relief

If you want to start your own business, you may be able to get tax relief for your start-up! This consists of a reduction in Corporation Tax for the first 3 years of trade. The tax relief can be applied to your profits and on chargeable gains made on assets. This scheme has been extended to 2021.

 

You could claim relief:

  • Corporation tax due is €40,000 or less in the tax year (if corporation tax is between €40,000 and €60,000, you may be entitled to partial relief)

  • Your PRSI is a max of €5,000 per employee and €40,000 on total

 

As of 2013 you have the possibility of carrying forward any unused relief from your first 3 years trading. Certain restrictions may apply.


The start-up must:

  • Be incorporated on or after 14 October 2008

  • Be set up and trading between 1 January 2009 and 31 December 2018

  • Not exceed the specified levels of corporation tax due

 

In most cases, the trade of a start-up company set up between 1 January 2009 and 31 December 2018 is a qualifying trade.

 

Trades that don't qualify include:

  • One previously carried on by another person with which the company has succeeded

  • Previously carried on as another person’s trade or profession

  • Land development

  • Exploration and extraction of petroleum or minerals

  • Service company activities as defined in Part 13 (Section 441) of the Taxes Consolidation Act 1997

  • Activities, including fishery, aquaculture, production of agricultural products and the coal sector

  • Activities carried on by an associated company of the new company which forms part of the trade carried on by the associated company

 

If your company takes on the activities of another trade, while already claiming relief, the new trade won’t be considered a qualifying trade. If your company transfers part of your qualifying trade to a connected person, then you’re no longer entitled to relief for that trade.

The relief is limited to the total amount of employer’s PRSI you pay and may be reduced if you pay over the limit of €5,000 per employee or the total PRSI limit of €40,000.

For example, if you pay employer’s PRSI of €6,000 for one employee, only €5,000 will be considered for relief.

If your corporation tax is between €40,000-€60,000, then you may be able to claim partial (also known as marginal) relief and since 2013, it’s possible to carry forward unused relief from the first 3 years of trading.

 

Leasing farmland

If you earn income from leasing your farmland you may be able to get tax relief if you lease your farm longterm. The farm must be in Ireland and the relief can’t operate to create a loss. To qualify, you can’t lease your land to a close relative.

You should declare this income on your annual tax return Form 11.

 

For your lease to qualify, it must be:

  • In writing or evidenced in writing

  • For a definite term of 5 years or more

  • For the purpose of working the land with the aim of taking produce from the land - for example, normal farming, market gardening, horse breeding, cattle dealing or fruit growing.

 

If you lease land to another person then you're the 'lessor'. Only lessors who are individuals can qualify for the relief.

You will qualify as a lessor if you have not, after 30 January 1985 (the budget date on which the relief was announced), leased the land from a connected person on favourable terms.

A 'lessee' is the person who leases the land from you. From 1 January 2015 a qualifying lessee can include a company. The lessee can't be connected to the lessor and must use the leased land for the purpose of carrying on a farming trade on a commercial basis and with a view to making a profit.

The profit from the letting of the farmland is assessed by Revenue as rental income. This relief is given as a reduction (up to a maximum limit) of your total taxable rental income. Your tax relief is also subject to a maximum reduction as outlined below. You'll only qualify for one reduction regardless of the number of qualifying leases you may have.

Table: Leases entererd into 1 Jan 2007-31 Dec 2014
Lease term Amount
5 years or more but less than 7 years €12,000
7 years or more but less than 10 years €15,000
10 years or more €20,000

 

Leases entered into on or after 1 January 2015

Lease term Amount
5 years or more but less than 7 years €18,000
7 years or more but less than 10 years €22,500
10 years or more but less than 15 years €30,000
15 years or more €40,000

Significant buildings and gardens

You may get tax relief if you own or occupy:

 

  • An approved building, including surrounding garden

 

  • An approved building used for tourist accommodation

 

  • An approved garden

 

  • An approved object

 

To qualify, your building, garden or object must be of substantial scientific, historical, architectural or aesthetic interest to be approved as determined by the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs. An approved object is a picture, sculpture, print, book, manuscript, jewellery, furniture or scientific collection.

There must also be reasonable public access to the building, garden or object or the building must be used for tourist accommodation.

You can claim relief for cost of the repair, maintenance or restoration expenses for the building and surrounding garden. However you can’t claim relief where you received a grant, refund, or tax relief from elsewhere in relation to the expenses.

To receive a determination by Revenue that the public has reasonable access, you can apply directly to them. Alternatively, you can get this form from your Business Income Tax branch.

 

Access to all or a substantial part of your building or garden must be available and accessible:

  • At reasonable times apart from necessary closures for upkeep

  • For at least 60 days in the year with no less than 40 days from 1 May 30 September inclusive and 10 of these days must be Saturdays or Sundays

  • during the National Heritage Week if it falls in the 40 day opening requirement

  • for at least 4 hrs per day

 

You must also:

  • Have a reasonable admission price

  • Advertise opening times and have a sign with opening times outside

  • Advise Fáilte Ireland about access

  • In the case of an object, allow access as outlined above or display the object in a public place in a building that’s used as a tourist accommodation facility

 

If your approved building is being used as a tourist accommodation you must:

  • Use it as tourist accommodation for at least 6 months each year. At least 4 out of the 6 months must be 1 May - 30 September

  • Register or list the building with Fáilte Ireland as tourist accommodation

  • Inform Fáilte Ireland of opening times

 

You may change your approved building into a tourist accommodation facility or change your tourist accommodation facility back to a publicly accessible building with no tax consequences.

Yearly checks will be made to ensure you meet opening requirements and any expenditure on buildings, gardens or objects for which you claim relief may be examined as part of a Revenue audit.

 

Officers from the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs and Revenue must be allowed to:

  • inspect the approved building or garden

  • examine any work which you have claimed relief on

 

Any relief for expenses must be in relation to repair, maintenance or restoration of:

  • An approved building

  • Any garden or grounds of an ornamental nature occupied or enjoyed with that building an approved garden

 

You can claim additional relief up to a total of €6,350 for:

  • Repair maintenance or restoration work on an  approved object

  • Installation, maintenance or replacement of a security alarm system

  • Public liability insurance in your approved building or garden

 

Relief for qualifying expenses will be limited to the cost of the work carried out during the chargeable period. If you don’t claim your expenses in one period, then you're allowed to carry this forward to the following two periods.

 

Limit to relief for high earners

If you’re a high earner, your relief may be restricted by the High Income Earner Restriction (HIER). This limits the use of tax reliefs and exemptions by high income individuals and may apply if:

  • Your income is €125,000 or more (or less if there is ring-fenced income-income that is normally liable to tax at a specific rate), such as Deposit Interest Retention Tax (DIRT)

  • Your total reliefs are more than €80,000

  • The aggregate of your specified reliefs used are greater than 20% of your adjusted income

 

You can receive a repayment from this relief outside the 4 year limit.

 

Tax relief received over the previous 5 years may be clawed back if your building or garden:

  • Ceases to offer reasonable public access

  • Ceases to be a tourist accommodation facility

  • Relief for an object can be clawed back from the previous 2 years

 

Relief for Heritage Donations

If you donate an important national heritage item to an approved body, you can claim a tax credit equal to 80% of its market value. You can offset this tax credit against Income Tax (IT), Corporation Tax (CT), Capital Gains Tax (CGT) or Capital Acquisitions Tax (CAT).

 

In this case, a heritage item(s) means any kind of cultural item including:

  • An archaeological item, archive, book, estate record, manuscript, painting

  • Collection of cultural items

  • Collection of same in their setting which are considered appropriate for donation to the national collections

 

The national collections are described as Approved Bodies under the legislation.

 

These include:

 

The Minister for Arts, Heritage Regional, Rural and Gaeltacht Affairs, with the consent of the Minister for Finance also has the authority to approve further bodies for the purpose of the relief. These additional bodies must be funded wholly or mainly by the state or a public/local authority.

To make a donation, you must complete an application form. On the form you must include your value of the heritage item or collection of items and the body you want to donate the item to. A selection committee will decide if the heritage item meets the requirements. If they decide the item is suitable for donation, they will ask Revenue to determine its market value.

Revenue may seek expert advice when determining the market value of an item or collection.

 

The market value of an item is, the lesser of:

  • the value placed on the item by the donor

  • the value determined by us

 

In order for a donation to take place, the open market value of the item must be at least €150,000. If the donation is a collection of items, at least one item in the collection must have a minimum value of €50,000.

 

Claiming the tax credit

When you make a donation to an approved body, you will get a certificate of receipt. This certificate will include the market value of the donation and the tax credit you're due. You should send the original certificate to the Collector-General’s Office and they will process your tax credit. You can't offset this credit against USC and the credit is first offset against any arrears of taxes you may have.

Any balance can then be set against current or future taxes. This tax credit is non-refundable and won't lead to any repayment of tax.

 

Donation of Heritage Property to the Irish Heritage Trust

You can claim a tax credit equal to 50% of its market value on donations of heritage properties to the Irish Heritage Trust or Commissioners of Public Works. You can offset this tax credit against Income Tax (IT), Corporation Tax (CT), Capital Gains Tax (CGT) or Capital Acquisitions Tax (CAT), which might be Gift Tax or Inheritance Tax. However, no refund of the credit will be made.

A heritage property includes associated outbuildings, yards, gardens or designed landscapes and the contents of a building. You can speak with the Irish Heritage Trust or Commissioners of Public Works to find out what type of properties may qualify.

 

Donations to Sports Approved Bodies

An approved sports body with an approved project with the Department of Transport, Tourism and Sport (DTTAS) may be able to claim tax relief on donations made to the organisation. The donations must be at least €250 in the year. If you pay tax under the Pay As You Earn (PAYE) system and make a donation to an approved sports body,  then the sports body can claim the tax relief.

 

In cases of donations from individuals, the sports body must:

 

The relief is calculated by grossing up the donation at rate of tax paid by the individual. A sports body cannot claim the relief for donations from a self-assessed individual or company. It is the self-assessed individual or the company who claim the donation as an expense when calculating their total income or profit. In this case, there is no grossing up arrangement.

A donation will qualify under this tax relief if it is:

  • a payment, in the form of money, of at least €250
  • for the sole purpose of funding an approved project
  • not otherwise deductible by a self-assessed individual in calculating their trade profits
  • not otherwise deductible by a company as an expense in calculating their profits
  • not a qualifying donation under the Charitable Donation Scheme
  • not repayable

 

Double Taxation Relief

If you’re liable to tax in more than one country, you may abe able to claim double taxation relief. Ireland has tax treaties with 73 countries and the agreements cover direct taxes such as:

  • Income Tax

  • Universal Social Charge

  • Corporation Tax

  • Capital Gains Tax

 

If Ireland doesn’t have an agreement with the other country or the agreement doesn’t cover a specific tax, the taxes consolidation act 1997 provides for unilateral relief against double taxation in relation to certain types of income and gains.

 

This include:

  • Dividends from foreign subsidiaries

  • Foreign branch profits

  • Foreign interest and royalties

  • Leasing income

  • Capital gains on foreign assets

 

Ireland currently has signed comprehensive double taxation agreements with 74 countries, 73 of which are currently in effect:

Table: Double taxation relief agreements with Ireland (as of 2018)
Albania
Armenia
Australia
Austria
Bahrain
Belarus
Belgium
Bosnia-Herzegovina
Botswana
Bulgaria
Canada
Chile
China
Croatia
Cyprus
Czech Republic
Denmark
Egypt
Estonia
Ethiopia
Finland
France
Georgia
Germany
Ghana
Greece
Hong Kong
Hungary
Iceland
India
Israel
Italy
Japan
Kazakhstan
Korea (Republic of)
Kuwait
Latvia
Lithuania
Luxembourg
Macedonia
Malaysia
Malta
Mexico
Moldova
Montenegro
Morocco
Netherlands
New Zealand
Norway
Pakistan
Panama
Poland
Portugal
Qatar
Romania
Russia
Saudi Arabia
Serbia
Singapore
Slovak Republic
Slovenia
South Africa
Spain
Sweden
Switzerland
Thailand
Turkey
UAE -United Arab Emirates
Ukraine
UK- United Kingdom
USA- United States of America
Uzbekistan
Vietnam
Zambia

 

Tax agreements currently under negotiation 

  • Double Taxation Agreement signed with Kazakhstan on the 26 April 2017. Procedures to ratify the treaty are underway

  • Ireland has completed the ratification procedures to bring the Protocol to the existing Agreement with Belgium into force. When notification of the completion of ratification procedures by Belgium is received, the protocol will enter into force

  • Negotiations have concluded for new Double Taxation Agreements with:

    • Azerbaijan

    • Oman

    • Turkmenistan

    • Uruguay

 

  • Negotiations have concluded on a protocol to the existing Double Taxation Agreement with Mexico

  • In addition to the negotiation of new treaties, Ireland’s existing treaty base will also be updated to incorporate provisions under the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI)

 

Where Ireland doesn’t have a double taxation agreement with a particular country or a double taxation agreement doesn’t cover a particular tax, the Taxes Consolidation Act 1997 (TCA 1997) provides unilateral relief against double taxation in respect of certain types of income and gains:

 

  • Dividends from foreign subsidiaries

  • Foreign branch profits

  • Foreign interest and royalties

  • Leasing income

  • Capital gains on foreign assets.

 

There are also reliefs under:

  • EU "Parent-Subsidiaries Directive" (90/435/EEC) (section 831 TCA 1997).

  • EU "Interest and Royalties Directive" (2003/49/EC) (section 267G-L TCA 1997).

  • EU ''Mergers Directive" (90/434/EEC) (sections 630-638 TCA 1997).

 

Training Schemes

Certain training schemes count towards your period of unemployment, including:

  • Further Education and Training (FET) courses

  • Community Employment

  • Back to Education Scheme

 

If you work part-time

If you’re working part-time and claim your jobseeker’s payment for the other days you can still qualify for the Start Your Own Business Relief as long as you've been getting your jobseeker's payment for 312 days of unemployment. You can check with your social welfare local office or Intreo centre if you’re unsure if you qualify.

 

If you qualify for the Start Your Own Business Relief, the following must also apply:

  • Business must be set up between 25 October 2013 - 31 December 2018

  • Business must be new (not bought, inherited or otherwise acquired)

  • Must be unincorporated (not be registered as a company)

 

Back to work enterprise allowance and claiming

You can claim Start Your Own Business Relief if you’re getting the Back to Work Enterprise Allowance (BTWEA). If you started to get the BTWEA before 25 October 2013, you won’t qualify for this relief because you had already started your business before the start date for the scheme. Up to €40,000 is available on profits each year up to 2 years.

 

How you calculate the relief depends on when you set up the business:

Year 1:

You don’t need to pay income tax on your profits if they’re less than the cap. If you start your new business in January (and you use the calendar year as your accounting year) the cap for the year is €40,000. If you start your business later that year the cap will be reduced proportionately according to the month you start.

 

 

Example:

Say you start your business in February, 11 months remain in the year so you can earn up €36,667 (11/12 of €40,000). If you start your business in December, then 1 month remains in the year so you can earn up to €3,333 (1/12 of €40,000).

 

Year 2:

You don’t need to pay income tax on profits if they’re less than the cap of €40,000. The accounts for the second year will always be for a period of 12 months.

 

Year 3:

Any profits that fall into the first 24 months of your business in this year are still income tax free as long as they are under the cap. The cap for year 3 is calculated as €40,000 x [months left to claim]/12.

If you set up your business in January, then you’ll have used up the 24 months relief in Year 1 and Year 2 anyway so there is no relief available for Year 3. If you started your business later in the year then there is still some relief available.

Example: If you started your business in February, on the first year you claimed 11 months and you have 1 month left to claim for the 3rd year.

 

If you make a loss

If you make a loss in your first year of trading you can claim Start Your Own Business Relief before you claim relief for losses in following years.

This means that even if you make a loss you will receive actual value for those losses in future years instead of setting those losses against profits which would not have been subject to income tax under the Start Your Own Business scheme.

You apply for this relief when you do your income tax return and as a new business you get an extension to the normal filing  date. The Start Your Own Business Relief only applies to income tax payable on the profits from your business, so you’ll be liable to pay PRSI and USC on any profits earned in your new business.

Example: If you make a loss in year 1, you must claim Start Your Own Business Relief in year 2 before you claim relief for any losses you made in first year.

 

Capital Allowances: You must use Start your own business relief before claiming Capital Allowances. You can carry unused amounts of capital allowances forward for use in future years.

 

Research & Development Tax Credit

A tax credit is available for companies that spend money on research and development and is calculated at 25% of the qualifying expenditure and used to reduce the company’s corporation tax due.

 

A company may qualify if:

  • It’s within the charge of Corporation Tax in Ireland

  • It carries out qualifying activities in Ireland or the European Economic Area (EEA)

  • Expenditure doesn’t qualify for a tax deduction in another country.  

 

The research and development activity must:

  • be in the field of science or technology

  • involve systemic, investigative or experimental activities

  • involve one or more of these categories:

    • basic research

    • applied research

    • experimental development

  • seek to make scientific or technological advancement

  • involve the resolution of scientific or technological uncertainty.

 

 

Help-to-Buy Incentive

If you’re looking to buy a home in Ireland for the first time, the Help-to-Buy Incentive will give you a refund of income tax and DIRT paid in Ireland from the last 4 years.

 

You must buy or build the property to live in as your own home and to claim you must:

  • Be a first time buyer

  • Buy or build the property between 19 July 2016 and 31 December 2019

  • Live in the property as your main home for 5 years after you buy or build it

  • Be tax compliant or if you’re self-assessed you must have tax clearance

 

You must not have built or bought an apartment or house previously on your own or jointly with another person. If you’re buying or building a property with anyone else, they must also be first time buyers.

Anyone buying a property must have signed the contract to buy that property on or after 19 July 2016. If self-building, you must have drawn down the first part of the mortgage on or after that date.

The contractor you’re buying your home from must be approved by Revenue. You can check the list of approved developers and contractors to make sure they’re approved.

 

The property must be:

  • your home

  • newly built where the construction is subject to Value Added Tax (VAT) in Ireland

 

The property must not have been used or been suitable to use as a residential home previously. and if the property was non-residential but is converted for residential use, it may qualify for HTB.

However, if you buy or build the property as an investment, it will not qualify.

 

Purchase value

If you bought the property between 19 July 2016 and 31 December 2016, the purchase price must be €600,000 or less. If you bought it after 1 January 2017, it must be €500,000 or less. The purchase value of a new build means the price you bought it for. For self-builds, the purchase value is the approved valuation by the lender at the time you took out the mortgage.

 

Mortgage

For a mortgage to qualify, you must take out your mortgage on the property with a qualifying lender and it should be used only for buying or building the property. The loan must be at least 70% of the purchase value of the property and you’re permitted to have a guarantor on the loan.

 

How much can I claim?

You can claim the lesser of these:

  • €20,000

  • 5% of the purchase price or 5% of the completion value of a self-build property

  • amount of Income Tax and Deposit Interest Retention Tax (DIRT) you paid in the 4 years before your purchase or self-build.

The maximum payment is €20,000 per property. This cap applies regardless of how many people enter into a contract to buy a house Universal Social Charge (USC) or Pay Related Social Insurance (PRSI) aren’t taken into account when calculating how much you can claim.

 

How will I be paid the refund?

-If you bought or built the property between 19 July 2016 and 31 December 2016, the refund will be paid directly to you.

-If you buy a new build after 1 January 2017, the refund is paid to the contractor.

-If you self-build the property after 1 January 2017, the refund will be paid to the bank account of your loan provider.

 

What do I have to do?

If you pay tax through PAYE you must submit a Form 12 for each year you want to apply for a payment and pay any outstanding tax due. You can do this on Revenue online or contact Taxback.com for more info. You may have signed your contract to buy a new build or drew down the first part of your mortgage for a selfbuild between 1 January and 31 March 2017.

In this case, you may select the year of purchase to be the actual year you bought or built your home or the previous year provided you make your application before 31 May 2017. This allows you to select the 4 year period which is of most benefit to you.

You can apply as an individual or part of a group if you’re buying or building with other people. You must complete a declaration and select the years you want to use for a refund. You can do this the Revenue’s myEnquiries online system. When you’ve signed the contract for your home and are ready to make your claim, complete the following:

 

1. Upload the following information about your application through MyEnquiries:

  • copy of the signed contract

  • evidence of mortgage (including loan-to-value ratio)

  • proof of drawdown of the first part of the mortgage if it it’s self-build

  • take note of the MyEnquiries reference number

 

2. Log in to Help to Buy through myAccount or Revenue Online Service (ROS) and make your claim. You’ll need your myEnquiries reference number and you’ll be asked to confirm:

  • the property

  • purchase price

  • date of completion

  • mortgage

  • amount of deposit already paid

 

If you’re applying with others, you’ll also need to confirm the portion of the refund to be refunded to each person. If you’re self-building, you’ll need to provide the BIC and IBAN of the loan bank account.

You’ll be given a claim reference once you submit all the required information and if you need to make a correction, you can cancel your claim and submit a new one.

 

3. Once you submit your claim you should advise your developer or contractor (or solicitor if you're self-building) and give them your claim reference (issued to you after step 2) and access code (issued to you when you submitted your application)


  The information you have provided will need to be verified by the:

  • developer or contractor in the case of a new build

  • solicitor acting on your behalf in the case of a self-build

 

The refund you finally receive is limited to 5% of the purchase price of the house and this may mean it’s different to the maximum relief amount you were given at application stage.

 

Special Assignee Relief Programme (SARP)

This is available for certain employees who come to work in Ireland for an employer from abroad and applies to tax years 2012 to 2020. To qualify for this, the employer you’re working for should be incorporated and tax resident in a country with which Ireland has a double taxation agreement or a Tax Information Exchange Agreement (TIEA).

 

You can claim SARP if you meet the following requirements:

  • you arrive in Ireland anytime from 2012-2020 at the request of your employer to work for that employer (or associated company of that employer)

  • you work outside Ireland for a minimum of 6 months for the employer who assigned you to work in Ireland immediately before being assigned to work in Ireland

  • you work for at least 12 consecutive months from the date you’re first assigned

  • you weren’t tax resident in Ireland for the 5 tax years immediately preceding the year you arrive in Ireland to take up employment

  • you’re tax resident in Ireland for all years for in which you claim the relief

  • you earn a minimum basic salary of €75,000 per annum excluding bonuses, commissions or other similar payments, benefits or share-based remuneration

 

How do you calculate how much relief is due?

Where you meet all the conditions to qualify for the relief, you can make a claim to have a proportion of your earnings from the employment disregarded for Income Tax (IT) purposes. The proportion is 30% of your income over €75,000. However, you will still be due to pay Universal Social Charge (USC) on this amount.

You can claim the relief for a maximum of five consecutive years starting with the year you're first entitled to the relief. If you qualify for the relief, you're also entitled to receive, free of tax, certain travel expenses and certain costs associated with your children's education.

 

How do you apply for SARP relief?

Employers should send a Form SARP 1A for each employee to their Revenue Office within 30 days of the employee arriving in Ireland to take up duties.

 

How is relief granted?

You can be granted the relief through your payroll or by your employer completing part C of Form SARP 1A. You can also make a claim for the relief at the end of the tax year. You must submit a return of income for each year you claim the relief.

 

Foreign Earnings Deduction (FED) 

If you’re resident in Ireland for tax purposes but work abroad throughout the year, you may be able to claim FED.

 

Conditions to qualify

1.You must work in a relevant state during a tax year or continuous 12 month period spanning 2 years for:

  • at least 60 qualifying days in 2012, 2013 and 2014

  • at least 40 qualifying days in 2015 and 2016

  • at least 30 qualifying days in 2017 to 2020

 

Relevant state

Brazil, Russia, India, China and South Africa.

 

And From 1 January 2013:

  • Egypt

  • Algeria

  • Senegal

  • Tanzania

  • Kenya

  • Nigeria

  • Ghana

  • Democratic Republic of the Congo

 

From 1 January 2015:

  • Qatar

  • Bahrain

  • Malaysia

  • Indonesia

  • Vietnam

  • Thailand

  • Chile

  • Oman

  • Kuwait

  • Japan

  • Singapore

  • Republic of Korea

  • Saudi Arabia

  • United Arab Emirates

  • Mexico

 

From 1 January 2017:

  • Colombia

  • Pakistan

 

Qualifying days

From 2012 to 2014 a qualifying day is 1 of at least 4 consecutive days working in a relevant state.

From 2015 to 2020 a qualifying day is 1 of at least 3 consecutive days in a relevant state.

Time spent travelling from Ireland to a relevant state or from a relevant state to Ireland or to another relevant state is deemed to be time spent in a relevant state. This means that the day of arrival in the relevant state can be counted, provided the individual left Ireland the previous day and the day of departure from the relevant state can be counted, provided the individual does not arrive back in Ireland until the following day.

 

Time spent travelling is counted as a qualifying day if you travel:

  • from Ireland to a relevant state

  • from a relevant state to Ireland

  • from one relevant state to another

 

Saturdays, Sundays, and public holidays can be counted as qualifying days in a relevant state.

 

How much can I claim?

The allowance due is less than or equal to €35,000 or the specified amount. The specified amount is calculated using D x E/F:

 

  • D= number of qualifying days worked in a relevant state during the tax year

  • E= income from the employment in the tax year, including taxable share options less any qualifying pension premium. Excludes allowable expenses payments, Benefits in Kind (BIK), termination and restrictive covenants payments

  • F= number of days the employment is held in the year (there are 365 days in a full tax year)

 

 The specified amount is reduced by your income earned on qualifying days for which Double Taxation Relief is available under a tax treaty.

 

You can’t claim this deduction if you:

  • are taxed using Split-Year residence

  • receive Transborder Workers’ Relief 

  • receive relief under the Special Assignee Relief Programme

  • are a civil/public servant
  • receive key employee research and development relief

 

The relief is not available in respect of income from an office or employment that is chargeable on the remittance basis or in respect of income to which the following sections of the Taxes Consolidation Act 1997 apply:

  • 472D (Research and Development credit)
  • 822 (Split year residence treatment)
  • 825A (Relief for income earned outside the State)

and

  • 825C (Special Assignee Relief Programme)

 

How do I apply for FED?

You can apply for the deduction at the end of the tax year. In writing with a statement from your employer with details of:

  • Departer and returns dates Ireland

  • location/s where you worked abroad

 

You must claim the relief within 4 years.

 

Example

Tax year Tax year ending on Claim by
2013 31 December 2013 31 December 2017



Transborder Workers’ Relief 

This for people resident in Ireland but work and pay tax in another country. You can claim it if you travel daily or weekly to your place of work outside Ireland and you'll only pay tax in Ireland on any income you earn in Ireland. To qualify you must:

  • be tax resident in Ireland

 

 

  • have paid tax in the other country and are not due a refund of the tax

 

  • be present in Ireland for at least one day for every week you work abroad

 

The employment must be held for a continuous period of 13 weeks in the year.

You can't claim this relief if you receive Seafarers' Allowance, Foreign Earnings Deduction (FED) or Split-Year treatment. You can't claim relief if you'your spouse/civil partner are proprietary directors of the company you work for abroad.

You must apply in writing to Revenue for this relief. In your application you must include a final statement of Income Tax (IT) liability from the other country.

Agricultural Relief

Agricultural relief applies in respect of both gift tax and inheritance tax and operates by charging the tax on a reduced market value or ‘agricultural value’ of the particular agricultural property. This means the market value is reduced by 90%.

It should be noted that this calculation isn’t necessarily equivalent to charging CAT on 10% of the market value as deductions from the (90%) reduced agricultural value may be allowed in respect of certain items.

If you inherit or receive a gift of agricultural property that doesn't qualify for Agricultural Relief, it may qualify for Business Relief.


To qualify for the relief, the following conditions must be satisfied:  

  • The property/assets received must constitute ‘agricultural property’ (as defined) at the date of the gift or at the date of death, in the case of an inheritance.

  • They must also constitute ‘agricultural property’ on the valuation date, if this is different from the date of the gift or inheritance.The beneficiary must satisfy the ‘80% agricultural property’ test on the valuation date after taking the property/assets.

  • The beneficiary, or lessee where the beneficiary leases the agricultural property, must satisfy the various ‘active farmer’ requirements.

 

To qualify as agricultural property it can be:

  • Agricultural land, pasture and woodland situated in the European Union

  • Crops, trees and underwood growing on such land

  • Farm buildings and dwelling houses (and the land) that are proportionate in size and character to the requirements of the farming activities

  • Farm machinery situated on the property

  • Livestock and bloodstock on the property

  • European Union ‘single farm payment’ entitlements

  • Milk quotas where transferred with agricultural land (Revenue practice) Market gardens, ‘factory’ farms used for intensive rearing/production and fish farms do not constitute agricultural property unless they are part of the agricultural land. However, they may qualify for a similar type of relief known as ‘business relief’

 

The agricultural value of a gift or inheritance of agricultural property is 10% of its total market value. A similar calculation is applied to deductions, which can include costs and expenses.

You can use Revenue's Online Service (ROS) to claim Agricultural Relief through your IT38 return:


 

Capital Acquisitions Tax (CAT) - Business Relief (11)

CAT is a tax on gifts and inheritances. You may receive gifts and inheritances up to a set value over your lifetime before having to pay CAT. Once due, it is charged at a rate of 33%. ‘Gifts’ become inheritances if the person dies within 2 years of giving the gift. There is relief available from capital acquisitions tax on gifts and inheritances taken on or after 11 April, 1994 of relevant business property. The relief doesn’t apply to discretionary trust tax.

The relief amounts to a flat 90% reduction in respect of the taxable value of relevant business property. Where Business Relief is claimed, IT38 CAT Return must be filed electronically through the Revenue Online Service (ROS).

 

CAT - Dwelling House Exemption

This provides exemption from capital acquisitions tax where residential dwellings are acquired for less than their market value.

 From 25 December 2016 the very limited exemption applies to:

  • gift of a dwelling house to a relative aged 65 year or over

  • gift of a dwelling house to a relative who is permanently and totally incapacitated

  • inheritance of a dwelling house which was occupied by the disponer as his/her only or main residence at the date of his/her death.

 

Provided the beneficiary:

Lived in the dwelling house as his/her main residence continuously for 3 years immediately preceding the date of the gift/ inheritance

and

doesn’t have an interest in any other dwelling house at the date of the gift/inheritance.

The beneficiary must continue to own and occupy the dwelling house as his/her main residence throughout the period of 6 years commencing on the date the benefit is taken otherwise the exemption is withdrawn.

 

Flat-rate expense allowances

Flat rate allowances are a type of tax relief available to people working in certain trades and professions. The amount that can be claimed depends on the job.

For example, shop workers are granted flat rate expenses of €121 per year and bar trade employees get €97 per annum. Meanwhile, nurses who supply and launder their own uniforms can claim a deduction of €733.

There are also deductions available to doctors, engineers, plumbers, journalists, teachers, waiters, porters and many more.

You may be entitled to certain allowances based on your occupation to cover things you pay for your job like tools, uniforms, and subscriptions. What you can claim and how much will depend on the type of work you do.

The amount you can claim is agreed between Revenue and representatives of groups or classes of employees (usually trade union officials). All employees of the class or group in question can then claim the agreed deduction in their own tax credits.

Flat rate expenses 2018€ 2017 € 2016 € 2015 €
Agricultural advisors employed by Teagasc 671 671 671 671
Archaeologists: (Civil Service) 127 127 127 127
Architects employed by:
(a) Civil Service 127 127
127 127
(b) Local Authorities 127 127 127 127
Airline Cabin Crews 64 64 64 64
Bar trade: Employees 93 93 93 93
Building Industry:
Bricklayer 175 175 175 175
Fitter mechanic, plasterer 103 103 103 103
Electrician 153 153 153 153
Mason, roofer slater, tiler, floor layer, stone cutter 120 120 120 120
Driver, scaffolder, sheeter, steel erector 52 52 52 52
Professionals: Engineers, surveyors, etc. 33 33 33 33
General operatives (labourers etc. incl. Public Sector) 97 97 97 97
Bus, rail, and road operatives in:
Bus Atha Cliath, Bus Eireann and Iarnód Eireann 160 160 160 160
Cardiac Technicians:
  • Female
212 212 212 212
  • Male
107 107 107 107
Carpentry and joinery trades:
Cabinet makers, Carpenters, Joiners 220 220 220 220
Painters, Polishers, Upholsterers, Wood Cutting Machinists 140 140 140 140
Civil Service:
Architectural Technologists & Assistants 166 166 166 166
Clerks of Works (incl. Senior and District Inspectors) 142 142 142 142
Engineering Technicians for Archaeologists, Architects, Engineers and Surveyors 166 166 166 166
Park Rangers and constables employed by the Office of Public Works 77 77 77 77
Clergymen (Church of Ireland) 127 127 127 127
Consultants (hospital) Note: Deduction includes subscription to the Irish Medical Council 695 695 695 695
Cosmetologists:
Obliged to supply and launder their own white uniforms 160 160 160 160
Defence Forces Personnel:
(All enlisted personnel not in receipt of Uniform Replenishment Allowance) 150 150 150 150
Dentists in employment 376 376 376 376
Dockers 73 73  73  73
Doctors (hospital, including consultants) Note: Deduction includes subscription to the Irish Medical Council. 695 695 695 695
Draughtsmen (Local Authority)     133 133 133 133
Driving Instructors Note: This amount represents an annual allocation of half the biannual statutory ADI fee payable to the Road Safety Authority 125 125 125 125
Engineers employed by:
(a) Civil Service 166 166 166 166
(b) Local Authorities 127 127 127 127
(c) Eircom, Coillte, OPW 166 166 166 166
Engineering Industry [and Electrical Industry from 1997/98]:
Skilled workers who bear the full cost of own tools and overalls 331 331 331 331
Semi-skilled workers who bear the full cost of own tools and overalls 254 254 254 254
All unskilled workers and skilled or semi-skilled workers who do not bear the full cost of own tools and overalls 219 219 219 219
Firefighters Full-time 272 272 272 272
Firefighters Part-time 407 407 407 407
Fishermen in Employment 318 318 318 318
Foresters employed by Coillte 166 166 166 166
Freelance actors chargeable to PAYE 750 750 750
Grooms (Racehorse Training) 294 294 294 294
Home Helps (Employed directly or indirectly by Health Boards) 256 256 256 256
Hospitals Domestic Staff: To include general operatives, porters, drivers, drivers, attendants, domestics, laundry operatives, cooks, catering supervisors, waitresses, catering staff, kitchen porters
(a) who are responsible for providing and laundering their own uniforms. 353 353 353 353
(b) who are obliged to launder the uniforms supplied 185 185 185 185
(c) whose uniforms are supplied and laundered free 93 93 93 93
Hotel industry:
Head hall porter 90 90 90 90
Hall porter 64 64 64 64
Head waiter 127 127 127 127
Waiter 80 80 97 97
Waitress 80 80 80 64
Chef 97 97 97 97
Manager 191 191 191 191
Assistant Manager 127 127 127 127
Trainee Manager 78 78 78 78
Kitchen Porter 21 21 21 21
Journalists:
Journalists, including those in public relations area of journalism 381 381 381 381
Journalists who receive expense allowances from their employers 153 153 153 153
Local Authorities:
Executive Chemists 115 115 115 115
Parks Superintendents 40 40 40 40
Town Planners 115 115 115 115
Mining Industry:
(a) miners/shift bosses underground, mill process workers/shift bosses and steam cleaners 1312 1312 1312 1312
(surface workers) 655 655 655 655
Motor repair and motor assembly trades:
Assembly workers, greasers, storemen and general workers:
(a) who bear the full cost of own tools and overalls 52 52 52 52
(b) who do not bear the full cost of own tools and overalls 42 42 42 42
Fitters and mechanics
(a) who bear the full cost of  own tools and overalls 85 85 85 85
(b) who do not bear the full cost of own tools and overalls 42 42 42 42
Panel Beaters (See Panel Beaters/Sheet Metal Workers:
Nurses:
(a) where obliged to supply and launder their own uniforms 733 733 733 733
(b) where obliged to supply their own uniforms but laundered free 638 638 638 638
(c) where obliged to launder the uniforms supplied 353 353 353 353
(d) where uniforms are supplied and laundered by hospital 258 258 258 258
Nurses: Short Term Contracts through an Agency. Additional Amount Due 80 80 80 80
Nursing Assistants(including attendants, orderlies and nurses’ aides):
(a) where obliged to supply and launder their own uniforms 526 526 526 526
(b) where obliged to supply their own uniforms but laundered free 440 440 440 440
(c) where obliged to launder the uniforms supplied 234 234 234 234
(d) where uniforms are supplied and laundered by hospital 93 93 93 93
Occupational Therapists:
(a) where obliged to supply and launder their own uniforms 217 217 217 217
(b) where obliged to supply their own uniforms but laundered free 153 153 153 153
(c) where uniforms are supplied and laundered by hospital 52 52 52 52
Optometrists/Dispensing Opticians in employment
Registration Fee - once off fee paid initially in year 1 250 250 250 250
Retention Fee - payable in 1st year and each subsequent year 285 285 285 285
Restoration Fee - payable to re-register with the Opticians Board 279 279 270 270
Dispensing Opticians:
Registration Fee - once off fee paid initially in year 1 200 200 200 200
Retention Fee - payable in 1st year and each subsequent year 225 225 225 225
Restoration Fee - payable to re-register with the Opticians Board 215 215 215 215
Panel Beaters/Sheet metal workers:
(a) who bear full cost of own tools and overalls 78 78 78 78
(b) who do not bear full cost of own tools and overalls 40 40 40 40
Pharmacists 400 400 400 400
Pharmaceutical Assistants (formerly known as Assistant Pharmacists) 200 200 200 200
Note: These amounts represent the Annual Retention Fee payable to the PSI:
Physiotherapists:
(a) where obliged to supply and launder their own uniforms 381 381 381 381
(b)  where obliged to supply their own uniforms but laundered free 318 318 318 318
(c) where uniforms are supplied and laundered by hospital 64 64 64 64
Pilots (Airline Pilots Association) 275 275 275 275
Plumbing trades
Plumber (non-welder) 177 177 177 177
Plumber-welder 205 205 205 205
Pipe fitter-welder 205 205 205 205
Printing Bookbinding and allied trades:
Bookbinders (Hand) 109 109 109 109
Bookbinders (Others) 97 97 97 97
Compositors, linotype and monotype operators 121 121 121 121
Copy Holders, photo lithographers, photo engravers and workers in T and E section of newspapers 114 114 114 114
Monotype caster attendants, stereotypes and machine minders 135 135 135 135
Readers and revisers 100 100 100 100
Rotary machine minders and assistants 150 150 150 150
Others (e.g. cutters, dispatchers, rulers, warehousemen) 90 90 90 90
Professional Valuers in the Valuation Office 680 680 680 680
Radiographers:
(a) where obliged to supply and launder their own white uniforms 242 242 242 242
(b) where obliged to supply their own white uniforms but laundered free 143 143 143 143
(c) where white uniforms are supplied and laundered by hospital 73 73 73 73
Respiratory & Pulmonary Function Technicians 191 191 191 191
RTE National Symphony Orchestra 2476 2476 2476 2476
RTE Concert Orchestra 2476 2476 2476 2476
Shipping, British Merchant Navy, Foreign-going trade:
(a) First class passenger and cargo liners:
Master 318 318 318 318
Chief officer, chief engineer, other  officers, including pursers 318 318 318 318
Chief steward 318 318 318 318
Assistant steward 244 244 244 244
Carpenter 194 194 194 194
Other ranks 148 148 148 148
(b) Cargo-vessels, tankers, ferries:
Master 318 318 318 318
Chief officer, chief engineer, other officers, including pursers 318 318 318 318
Chief steward 318 318 318 318
Assistant steward 244 244 244 244
Carpenter 194 194 194 194
Other ranks 148 148 148 148
British home or coasting trade:
Master 318 318 318 318
Chief officer, chief engineer, other officers, including pursers 318 318 318 318
Chief steward 318 318 318 318
Assistant steward 244 244 244 244
Carpenter 194 194 194 194
Other ranks 148 148 148 148
Mercantile marine officers and crews of Irish ships:
Foreign-going trade: cargo vessels:
Master 98 98 98 98
Chief officer, chief engineer, radio officer 90 90 90 90
Other officers including pursers 73 73 73 73
Chief steward 73 73 73 73
Assistant steward 55 55 55 55
Carpenter (to include tools) 55 55 55 55
Other ranks, including boys 37 37 37 37
Home trade:
(a) Cross channel and continental:
Master 98 98 98 98
Chief officer, chief engineer, radio officer 90 90 90 90
Other officers, including pursers 73 73 73 73
Chief steward 73 73 73 73
Assistant steward 55 55 55 55
Carpenter (to include tools) 55 55 55 55
Other ranks including boys 37 37 37 37
(b) Coasting vessels:
Master 98 98 98 98
Chief officer, chief engineer, radio officer 90 90 90 90
Other officers:
Including pursers 73 73 73 73
Chief steward 73 73 73 73
Assistant steward 55 55 55 55
Carpenter (to include tools) 55 55 55 55
Other ranks, including boys 37 37 37 37
Shop Assistants:
(including supermarket staff, general shop workers, drapery and footwear assistants) 121 121 121 121
Surveyors  employed by:
Local Authorities 127 127 127 127
Civil Service 127 127 127 127
Coillte 127 127 127 127
Teachers:
Teachers [excluding guidance counsellors, third-level academic staff and physical education teachers]:
School principals 608 608 608 608
Other teachers 518 518 518 518
Part-time teacher (on full hours) 518 518 518 518
Part-time (not on full hours) 279 279 279 279
Guidance Counsellors:
(a) employed full-time in second level schools 518 518 518 518
(b) engaged mainly in teaching general subjects but also doing part-time guidance counselling (additional allowance) 126 126 126 126
Third level academic staff:
Professor, Heads of Schools/Departments 608 608 608 608
Senior lecturer 518 518 518 518
College lecturer 518 518 518 518
Assistant lecturer 518 518 518 518
Part-time lecturer (on full hours) 518 518 518 518
Part-time lecturer (not on full hours) 279 279 279 279
Physical education teachers (teacher must hold qualification in physical education):
(a) fully engaged in teaching P.E. 518 518 518 518
(b) engaged mainly in teaching general subjects but also doing part-time P.E. (additional allowance) 126 126 126 126
Note: Teachers who are employed by the Department of Education may also claim a deduction in respect of the subscription to the Teacher's Council of Ireland
Veterinary Surgeons in Employment:
Employed vets who incur, and are not reimbursed the cost of the Registration Fee to the Veterinary Council 621 621 621 621
Employed vets who do not incur, or are reimbursed the cost of the Registration Fee to the Veterinary Council 171 171 171 171
Veterinary Nurses:
Where obliged to supply and launder their own uniforms 400 400 400 400
Where obliged to launder the uniforms supplied 150 150 150 150

 

When you apply with Taxback.com, we’ll ensure to check if you’re due any flat rate deductions as part of your job.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

6. Taxation of married couples and civil partners

Getting married can affect many aspects of your life in Ireland – ranging from life insurance and pensions, to inheritance and presumption of paternity. It can also have a significant impact on your taxation status. All married couples and registered civil partners are treated the same way for tax purposes. Once you’re married/registered in a civil partnership, you should inform Revenue as soon as possible.


In your year of marriage or civil partnership you’ll be taxed as normal – i.e. as single people. However, the good news is that if you paid more tax individually in that year than you would have if you were taxed as a couple, you can claim a refund of the difference after 31 December.

Any refund due will be from the date of marriage/registration. In other words, the amount you receive will be paid in proportion to the number of months that you were married/in civil partnership. After the year of your marriage, there are 3 options for calculating tax.

You can pick whichever option is of most benefit for you as a couple:

1. Joint assessment 

2. Separate assessment 

3. Separate treatment

 

Health expenses

It’s important to note that regardless of the assessment option you choose, there are a number of expenses you can claim to reduce your tax liability. Health expenses are one of the most common deductions. You can claim for numerous health expenses (including doctor and consultant fees, drugs and medicines prescribed by a doctor and much more) claimed throughout the year by you or your spouse or civil partner.

Read more about what health expenses you can claim here

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

Joint assessment

Joint assessment is the option that benefits most couples. It allows you to split your tax credits and rate band with your partner. If you choose this option, you must inform Revenue before 31 March in the year of assessment.

 

Assessable spouse or civil partner

With joint assessment you can choose whether you or your partner will be the assessable spouse. The person nominated will be responsible for filing tax returns and paying any tax due.

By not contacting Revenue to nominate a person, it’s likely they’ll automatically choose the person with the highest income in the latest year for which the income of both people is known. This person continues to be the assessable person until you jointly elect to nominate the other person.

 

Allocating tax credits

You can allocate your tax credits and rate band however you wish – provided both you and your partner have taxable income. However, you can’t transfer the employee tax credit, employment expense or increase in standard rate band. Both partners will receive Tax Credit Certificates showing the allocation of the credits and rate band.

If you or your partner are self-employed, don’t worry. You can still pick joint assessment. You’ll need to choose between paying most of the tax under the PAYE system or in a lump sum under self-assessment. You can do this by allocating your credits and rate band appropriately. If you decide to pay most of your tax through PAYE, your credits (apart from the employee tax credit and employment expenses), should be allocated to the self-employed person.



Refunds

If you’re due a refund at the end of the year, this will be repaid to each person in proportion to the amount of tax each person paid. Separate Assessment Under the separate assessment option, you’ll be taxed as single individuals. If you’re claiming any of the tax credits below, they’ll be split equally between both people.

 

  • Married or Civil Partner’s Tax Credit

  • Age Tax Credit

  • Blind Tax Credit

  • Incapacitated Child Tax Credit

 

The Employee Tax Credit will be given to you and your spouse/civil partner separately if you have PAYE income. After year end, you can claim any credits or rate band that your spouse/civil partner didn’t use. You’ll also have to decide between filing a single or a joint tax return. In a joint tax return, you must include details of income and expense for both partners.

To choose separate assessment, you must contact Revenue between 1 October of the previous year and 31 March in the year you would like to apply. Either spouse or civil partner can take the decision to opt for separate assessment. The person who originally requested separate assessment must also request any necessary change in assessment.

It’s important to remember that a separate assessment can’t be backdated and will last until you request to change it. Overall the tax you pay under this option is the same as the tax you would pay under joint assessment.

 

Another option is separate treatment also known as single treatment. With this option you’ll receive the same tax credits and rate band as a single person. Crucially, under separate treatment, you can’t claim any of your spouse or civil partner’s unused credits, rate band, or for any payments made by the other person. You won’t be able to claim the Home Carer tax credit either.

Simply put, you both have to pay your own taxes and/or file your own returns. To choose the separate treatment option, you must inform Revenue in the year that you want to apply. Similarly to separate assessment, the decision to choose separate treatment can be made by either spouse or civil partner and must be withdrawn by whoever requests it.

 

If you were married outside of Ireland, you may still be able to get the taxation benefits in Ireland. There are also a number of overseas marriages and civil partnerships Revenue recognise for tax purposes. This means that if your foreign registered marriage or civil partnership is recognised, you’ll be taxed in the same way as a couple who were legally married in Ireland. 

You should send Revenue details of the date, jurisdiction and title of your registered relationship, as well as your own and your partner’s Personal Public Service Number (PPSN).

 

Residency

A relationship where one partner is resident in Ireland and one partner isn’t will affect the tax situation for the couple in a number of ways:

 

1. If one partner has no income, you can choose joint assessment and claim the married or civil partner’s tax credit and the increased rate band

 

2. If both partners have income you’ll be assessed under separate treatment and taxed on your income only. You’ll be able to claim the single person’s tax credit and rate band. However, if the tax you pay individually is greater than what you would have paid under joint assessment, you may be able to claim additional relief. You can choose joint assessment and claim the appropriate credits and rate band.

 

3. Where neither partner is a resident in Ireland, each partner with taxable income in Ireland will be treated as if they were single and may claim proportionate tax credits in certain cases (i.e. portion of tax credits based on income taxable in Ireland over the worldwide income earned during the year).

 

Unemployment 

There are a few options should either yourself or your partner stop working during the year.

 

  • Firstly, you can transfer any unused credits or rate band to the other spouse or civil partner if you're jointly assessed

 

  • Alternatively, you can withdraw from separate assessment (within the time limits) and transfer any unused credits or rate band to the other spouse or civil partner

 

  • Or you could choose to switch to joint assessment if you're assessed under separate treatment.

 



Rate bands, credits and thresholds

Single or widowed or surviving civil partner (without qualifying child) – first €35,300 taxed at 20% and balance taxed at 40%.

Single or widowed or surviving civil partner, qualifying for Single Person Child Carer Credit – the first €39,300 is taxed at 20% and balance taxed at 40%.

Married or in a civil partnership, one spouse or partner has an income – the first €44,300 is taxed at 20% and the balance is taxed at 40%.

Married or in a civil partnership, both spouses or partners have incomes – the first €44,300 is taxed at 20% (with increase of €26,300 max) and the balance is taxed at 40%.

You can't transfer the increased rate band between spouses or civil partners.

 

Home Carer Credit

The Home Carer Tax Credit is given to married couples or civil partners (who are jointly assessed for tax) where only one spouse or civil partner works and the other stays at home to take care of a dependent person* (a child from whom child benefit is payable, a person over 65 or a person with a disability who requires care). Also note that you can’t claim both the Home Carer Credit and the increased rate band.

You should claim whichever is of more benefit to you. When you apply with Taxback.com, we can tell you which is best.

* A dependent person you're caring for cannot be a spouse or civil partner.

Read more about the Home Carer tax credit here. 


Single Persons Child Carer Credit

The Single Person Child Carer Credit (SPCCC) is a tax credit for people caring for children on their own. If you were claiming SPCCC at the beginning of the year in which your marriage or civil partnership is registered, you can continue to claim it for the remainder of the year. You can read more about the Single Person Child Carer Credit here

 

Age Tax Credit

If you turn 65 during the tax year, then you’ll be awarded an Age Tax Credit of €245. This amount increases to €490 for a married couple or civil partnership and is awarded as soon as either member of the couple reaches 65. You can claim the credit if either you or your spouse or civil partner reach the age of 65 at any time during the tax year.

You’re both entitled to the credit even though only one person is 65. However, if you  chose to be assessed under separate treatment, both partners must be 65 to claim the credit.

 

You or your partner may not have to pay any tax at all if your total income is less than the exemption limit.


Exemption limits

If you’re 65 years or over you won’t pay any tax where your total income is less than the following amounts:

Personal circumstances

Amount

Single, widowed or a surviving civil partner

€18,000

Married or in a civil partnership

€36,000

With qualifying children, the exemption limits are increased by:

  • €575 each for your first two children

  • €830 for each additional child


To qualify your child must be:

  • born during the year

  • under 18 years of age at the start of the year

  • aged over 18 and attending college on a full-time basis or trains for a trade or profession for a maximum of two years

  • became incapacitated before they turned 21

  • became incapacitated after turning 21 but at college full-time, or training for a trade or profession for a maximum of 2 years


Marginal relief

If your income is more than the outlined exemption limit, you might still be able to claim marginal relief. This would mean that any income in excess of the exemption limits will be subject to 40% tax and no tax credits can be utilized to reduce the taxes due. This relief is only given when it is more beneficial than using your tax credits.

When you’re allowed marginal relief, your employer or pension provider will receive a Tax Credit Certificate which will display the granted relief.

You can read more about Marginal Relief here.

 


Universal Social Charge

The Universal Social Charge (USC) applies to both you and your spouse or civil partner individually. In this regard there is no advantage from a USC perspective whether you're married or not.

 

Transferring assets

If you’re living with your spouse or civil partner, you can transfer an asset to them without having to pay Capital Gains Tax. You partner will also not have to pay Capital Acquisitions Tax on the transfer as transfers between spouses are exempted from CGT and CAT.

 

Tax after bereavement - in the year of the death

Single people

In the year in which someone who is single dies, he/she would be entitled to the single tax credits they’re usually entitled to for a whole year – January to December. If a tax refund is due, the person responsible for finalising the affairs of the deceased must claim it. In this instance, Revenue treat widowed people, surviving civil partners, and unmarried couples in the same way as single people.

 

Married couples and civil partners

If your spouse or civil partner dies, how you’ll be taxed that year will depend on how you were taxed as a couple – for example whether you were taxed through Single Assessment, Separate Assessment or Joint Assessment.

 

Single assessment

If you were both taxed through single assessment, the Widowed Person's or Surviving Civil Partner's Tax Credit will replace the personal tax credit that you had at the start of the year.

 

Separate assessment

If you and your spouse/civil partner have been taxed under separate assessment, then the Widowed Person’s or Surviving Civil Partner’s Tax Credit replaces your personal tax credit. There may also be some unused tax credits that could be allocated to your spouse or civil partner.

 

Joint assessment

When a married couple is jointly assessed for tax, the nominated spouse or civil partner with the obligation to make tax returns, etc., is referred to as the assessable spouse or nominated civil partner. The tax treatment of a married couple jointly assessed for tax in the year where one spouse dies depends on whether the assessable spouse or the non-assessable spouse dies.

 

Non-assessable spouse In a tax year where a non-assessable spouse dies, the assessable spouse:

  • is taxable on his/her own total income for the full year plus the total income of his/her spouse to the date of death

  • is entitled to the full amount of the married tax credit and the PAYE credit (2 PAYE credits if both have enough income taxable under the PAYE system)

  • may claim other tax credits due to both spouses in that year

 


Assessable spouse

The tax year in which an assessable spouse dies is split into 2 parts.

 


For the period 1 January to the date of death, the assessable spouse:

  • is taxable on his/her own total income and the total income of his/her spouse for this period

  • is entitled to the full amount of the married tax credit and the PAYE credit (2 PAYE credits if both have sufficient income taxable under the PAYE system)

  • may claim a proportion of other credits up to date of death

  • has the tax rate bands that apply to a married couple

 


From the date of death to the end of the tax year, the non-assessable spouse:

  • is assessable on their own income for this period

  • is entitled to the widowed person’s tax credit for the year of bereavement and also the PAYE credit (if taxed on PAYE)

  • may claim tax credits for the period following the death

  • has the tax rate bands that apply to a single or widowed person

 

 

Tax after bereavement – following the year of the death


Widowed Person’s Tax Credit

There is an increased tax credit available for widowed people however the amount varies depending on how recent the bereavement was and whether or not the surviving spouse has dependent children.

 

Widowed person without dependent children

A widowed person without a dependent child can still get the Married Person or Civil Partner’s Tax Credit in the year of bereavement (€3300 for 2018). However, each year following the year of bereavement, a widowed person will receive the Widowed Person or Surviving Civil Partner's Tax Credit (€2190 in 2018).

 

Widowed person with dependent children

A widowed person with a dependent child will still get the Married Person or Civil Partner’s Tax Credit in the year of bereavement. However, in subsequent years where there are dependent children, a Widowed Person or Surviving Civil Partner's (with dependent children) Tax Credit (€1650 in 2018) and a Single Person Child Carer Credit (€1650 in 2018) are available.

A widowed person with dependent children will also be entitled to claim an additional tax credit - the Widowed Parent or Surviving Civil Partner Tax Credit (further details below) – for the first 5 years after the year of death.

If you’re widowed with dependent children and haven’t remarried but are cohabiting with a partner, you’re not considered a widowed person (with dependent children) for tax purposes. This means that while you can still receive the Widowed Person's Tax Credit, you won’t be entitled to the Widowed Person's (with dependent children) Tax Credit or the Single Person Child Carer Credit.

If you haven’t remarried and no longer have dependent children, you won’t be considered as a widowed person (with dependent children) and will instead receive the Widowed Person or Surviving Civil Partner's Tax Credit.

 

Widowed Parent or Surviving Civil Partner Tax Credit

Starting in the year after the year of bereavement, the Widowed Parent or Surviving Civil Partner Tax Credit is available for 5 years. In other words, if your spouse died in 2018, you’ll start to receive this credit in 2019. Only one credit will be granted, irrespective of how many children you have.

 

To qualify:

  • You must not have remarried by the start of the tax year and be cohabiting

  • A qualifying child must reside with you for some part of the tax year

  • The child must be under 18 or if over 18 be in full-time education or undergoing a full-time training course for a trade or profession for a minimum of 2 years

  • There’s no age restriction if the child became permanently incapacitated when under 21 or in full-time education or training

  • The child may be an adopted child, a stepchild or any child you support and for whom you have custody


As illustrated below, the amount of tax credit varies each year.

 

Rates

You may claim the Widowed Parent Tax Credit if you're a widowed person or surviving civil partner. You must have dependent children in order to qualify.

You can claim this credit for 5 years after the year of death of your spouse/civil partner. The tax relief due in the years after bereavement is as follows:

  • €3,600 in the first year

  • €3,150 in the second year

  • €2,700 in the third year

  • €2,250 in the fourth year

  • €1,800 in the fifth year

You can only receive one tax credit, regardless of how many children you may have. You may also qualify for the Single Person Child Carer Credit (SPCCC).

 

Tax implications of separation and divorce

If you’re married and decide to separate or divorce, there will likely be tax implications. If you believe your separation will be permanent, you should contact Revenue to make the tax adjustments for the year in which you separated and for subsequent tax years.

 

Taxation in the year of separation

Depending on how your tax was assessed as a married couple, there are a number of different ways in which you can be taxed during the year of separation. If the couple is assessed as single persons, there's no change in their tax assessment.

However, if you and your partner are taxed under separate assessment, income up to the date of separation is assessed in the normal way and you can transfer to each other any unused tax credits and rate bands that apply.

After the date of separation and for the remainder of the tax year, each spouse will be treated as a single individual and will receive the single person’s tax credit.

 

Meanwhile, under joint assessment

  • If you’re the assessable spouse, you’ll be entitled to the married person’s tax credits and double rate bands for the full year in which you separate. You’ll be taxed on your own income for the full year as well as your spouse’s income for the year up until the date on which you separated.

 

  • If you’re the spouse who wasn’t assessable, then you’ll be taxed on your own income from the date of separation. You’ll be entitled to the full single person’s tax credit and taxed under the single rate bands.

 

Taxation in years that follow

If you’re separated, depending on your circumstances, you may choose to be taxed as a married couple or single person after the year in which you separate. Maintenance payments are one key factor in deciding which tax arrangement will apply.

 

Maintenance payments

These payments are for the support of the other spouse (and/or children). They’re usually made under informal and voluntary agreements, although they can be legally enforceable.

 

Voluntary maintenance payments are ignored for tax purposes. So if you make a voluntary payment to your spouse, you’re not entitled to a tax deduction. If you’re receiving a maintenance payment from your spouse, you won’t be taxed on it.

If you pay voluntary maintenance and it’s your spouse’s main income, then you may claim the married person’s tax credit rather than the single person’s credit, but you’ll still retain the tax rate band for a single person.


Legally enforceable maintenance payments made under a court order or ruling, a deed of separation, or a covenant or a trust. Any maintenance payment for the benefit of a child is ignored for tax purposes. If both partners are taxed as a single people and you make this payment to your spouse, you won’t be able to claim a tax deduction for it. If you’re receiving the payment, you won’t be taxed on it.

Alternatively, if there are legally enforceable maintenance payments, you and your spouse may decide to opt to be taxed as a married couple. In these instances, similarly to the above, the payments will be ignored for tax purposes. No tax will be deducted and no expenses can be claimed.

If you choose to be assessed as a married couple, you must contact Revenue before the end of the tax year. To be eligible, you must be resident in the State and there must be a legally enforceable agreement for maintenance payments. Also, if you’re divorced you must not have remarried.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

7. Tax for Non-residents

Your liability for tax in Ireland depends on whether you’re a resident here and if Ireland is your permanent home or not.

Depending on how many days you stay in the country each year, there is a specific definition of residency. Even if you’re not resident one year, you can still be ‘ordinarily resident' in another. 

If you’re resident in Ireland for tax purposes in a given year, then you’ll be taxed here on your worldwide income in that year.  If you're non-resident in a particular tax year, then  you’ll be charged tax on your income from Irish sources only.

Your liability for tax in Ireland may also be influenced by your ‘domicile’ status. Your domicile is the country know as your permanent home and your taxes may also be influenced by a double taxation agreement.

 

If you’re non-resident for tax purposes, you’re liable to tax in Ireland on:

  • Irish-sourced income

  • Foreign employment income where duties of the employment are carried out in Ireland

 

If you’re non-resident in Ireland for tax purposes but deemed ‘ordinarily resident’, then you’re chargeable to tax in Ireland on your worldwide income except where:

  • income from a trade or profession where no part is carried out in Ireland

  • income from an office or employment where all the duties are carried out outside Ireland

  • other foreign income if it’s €3,810 or less (if it’s more than €3,810, the full amount is taxable)

 

How to know if you’re ordinarily resident for tax purposes

If you’ve been resident in Ireland for 3 consecutive tax years, you become ‘ordinarily resident’ from the beginning of the 4th tax year. If you leave Ireland after this, you’ll continue to be ordinarily resident for 3 consecutive tax years.

 

What is 'Domicile'?

Your ‘domicile’ also affects the tax you pay. Domicile broadly means living in a country with the intention of living there permanently. You’ll keep your domicile of origin unless you choose to gain a new domicile.

To gain a new domicile, you must show clear evidence you intend to live permanently in the new country and don’t intend to return to live in your domicile of origin.

 

How do I know if I’m resident for tax purposes?

You’re deemed resident in Ireland for tax purposes if you’re in Ireland for:

  • 183 days or more in a tax year

or

  • 280 days or more in a tax year plus the previous tax year taken together, with a minimum of 30 days in each year.

 

For these purposes, a 'day' means any part of a day

 

Tax credits for non-residents

European Union (EU) citizens or nationals

If you’re a citizen  of the EU, then 75% of your worldwide income is taxable in Ireland and you’ll get the full tax credits on a cumulative basis.

 

Citizen of a country with a tax treaty

If you’re from a country with which Ireland has a tax treaty and your only source of income is Irish, you’ll get the full tax credits on a cumulative basis. If you have non-Irish income, then you may receive a portion of tax credits. You can read a list of countries that have treaties with ireland here.

 

Other non-residents

All other non-residents receive no tax credits. A PAYE Exclusion order might be issued if all your employment duties are abroad or if you’ll be non-resident in Ireland in the tax year. The order instructs your employer not to deduct income tax or USC.

 

Ownership of property

If you own a property in Ireland, this doesn’t make you resident for tax purposes, however this could be a factor in determining a single country of residence under a tax agreement where the other country claims you’re resident there.

 

Electing to be resident

You can elect to be resident in Ireland for a year even if you haven’t spent the total number of days in the state that year. To avail of this, the tax office must be satisfied that you’ll be resident in the following year for the required number of days.

Once you have made such an election you can’t cancel it and as a resident will have to pay tax on your worldwide income during the entire tax year of your arrival in Ireland. Your employment income will only be taxable from the date of your arrival. An election may be made in writing to your local tax office.

 

Double taxation agreements

Ireland has double taxation agreements with many countries to prevent you being taxed twice on the same income. Here is is a list of the double taxation agreements that are in effect.

If the other country has a double taxation agreement with Ireland  you don’t have to pay tax on the same income by either:

  • Exempting the income from tax in one of the countries, or

  • Allowing credit in one country for the tax paid in the other country on the same income

 

The treatment of your income will largely depend on the agreement and in some cases your nationality and citizenship.

If the other country doesn’t have an agreement with Ireland, then the amount of tax paid in Ireland will be based on the net amount received by you after the deduction of foreign tax paid.

There’s no credit for foreign tax paid against your Irish tax liability on the same income.

 

Income earned before moving to Ireland

If you move to Ireland for the first time or are an Irish citizen returning to live in Ireland and weren’t resident or ordinarily resident when the income was earned, the position will be as follows:

  • Funds accumulated from income earned before the beginning of the tax year in the year you become resident in Ireland is not liable to income tax

  • Income other than employment income arising between the beginning of the tax year and date of your arrival will be taxable if brought into Ireland, unless a double taxation agreement provides for a different treatment

 

If you work in Ireland and get paid from abroad

Unless you income is prevented from being taxed in Ireland due to a double taxation agreement, it will be taxable here from the date you arrive, regardless of your residency status.

If you’re an Irish citizen who is not ordinarily resident or not Irish domiciled, your foreign employment income (excluding UK sourced income) will only be taxable to the extent that it’s remitted into Ireland. If you’re resident for Irish tax purposes in the year the income is earned, you’ll be entitled to full personal tax credits and reliefs.

 

Temporary employment in Ireland

If you come to Ireland, are temporarily employed here and won’t become resident for tax purposes, then the same number of credits and reliefs to non-residents or EU nationals are available to you.

This also applies to residents of countries with double taxation agreements with Ireland. The proportion of allowances is calculated depending on your income for the tax year which is subject to Irish tax over your income from all sources. However, residents of another member state of the European Union are entitled to full personal tax credits and reliefs in respect of any tax year that 75% or more of their worldwide income is taxable in Ireland.

Pensions and other assets are taxable apart from some exceptions such as some UK pensions.

 

Can I make a claim on leaving Ireland?

On leaving you should notify Revenue, as you might be entitled to a tax refund. You may do so by completing Form P50 and submitting it to your local Revenue office with Form P45 (parts 2 & 3) which you should receive from your employer.

1st page of Form P50:


 

What happens if I move abroad?

If you move abroad and are resident in Ireland in the year of departure and non-resident the next year, you can claim 'Split-Year treatment' in the year of departure. You can read more about Split-Year treatment here.

 

What if I’m returning to Ireland?

If you’re coming to live in Ireland or returning here after being abroad for a few years and will be resident here for the next year, you can claim Split-Year treatment in the year you arrive. This means you’ll be treated as a resident in Ireland from the date you arrive. All your employment income from that date is taxed in the normal way.

Generally, full tax credit will be allowable on a cumulative basis. Split year treatment applies to employment income only and you can read more about that here.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

8. Filing a Tax Return

While most PAYE employees have their taxes deducted at source, there maybe times when you need to file a self-assessed tax return.

 

You may need to file a tax return if:

  • You're self-employed

  • You're registered for income tax

  • You have rental income

  • You let out a room/entire home on Airbnb

  • You earn money from the sharing economy-DoneDeal, housesitting, Hassle.com, etc

  • You had foreign income including foreign pensions

  • You earn money as a blogger for gifts with a value over €5000

  • You earn extra income outside of PAYE (investment income, maintenance payments, fees that are exempt from PAYE)

  • You have profited from share options or share incentives

  • You want to claim a tax refund

  • You have profited from share options or share incentives

 

If you earn extra income outside PAYE, the type of forms you need to file will typically depend on the amount of income. So for example if you earn non-PAYE income over €5000 then you’re obliged to register for income tax and you can proceed with a Form 11. 


To file a form 11 you’ll need:

  • Personal details: name, date of birth, PPS number (self and spouse if applicable)

  • Details of your PAYE Income – this can be found on your P60 or P45

  • Social Welfare receipts – the total taxable social welfare amounts received during the year

  • Trade/Profession/Vocation – including total income, sales, receipts and a breakdown of your total expenses. An accounts extract is required for each trade or profession you have.

  • Details of losses and capital allowances (carried forward or current)

  • Any rental income and related expenses

  • Foreign Income, Income From Fees, Covenants, Distributions, etc

  • Any Exempt Income, Annual Payments, Charges and Interest Paid

  • Capital Gains - Capital Gains for the year 1 January 2016 - 31 December 2016

  • Tax Credits – your personal tax credits can be found on your Tax Credit Certificate

 

Who is a chargeable person?

You are a chargeable person if you have a PAYE source of income and, either:

  • Net assessable non-PAYE income (including income subject to DIRT) of €5,000 or more in a year

or

  • Total gross income from non-PAYE sources (including income subject to DIRT), of €30,000 or more in a year. This applies even if you have no tax liability on this income because it is covered or largely covered by losses, capital allowances and other reliefs.

If you are a chargeable person you must file a Form 11 self-assessed tax return for the relevant year. From 2014 if you are a chargeable person you must also pay PRSI at Class K on your assessable income.

 

You may also have to pay preliminary tax on your Form 11. This is income tax for the current tax year. Preliminary tax liability can be based on 90% of your actual tax liability for the current year or 100% of your tax liability for the previous year.

Most people won’t know their liability so just choose to pay 100% of the previous year’s liability if possible to ensure no additional surcharges or interest. So, for example, if your tax liability for 2016 is €10,000, your preliminary tax for 2017 will be €10,000 also.

 

Form 12

 

If you earn less than €5000 of income outside of PAYE, you’re not obliged to register for Income tax and you’ll need to file a Form 12 for the previous year’s earnings by the october deadline.

So for example if you earned income from an Airbnb letting in 2016, you must file by 31 October 2017, however there may be an extended deadline for online filing and if you use a tax agent like Taxback.com.

 

You will typically need the following information with your form 12:

  • Personal details (name, address, date of birth)

  • PPS number

  • PPS number of spouse and child if applicable

  • P60 and spouse's P60 if applicable

  • Any details of extra income including rental income, foreign income, capital gains, income from fees, covenants, distributions

  • Exempt income

  • Property based incentives

  • Tax Credit Certificate or Details of Tax Credits to be claimed e.g. PAYE credit, personal credit, medical expenses, single parent family credit, etc.

  • Details of expenses or reliefs to be claimed



Form 12 can also be used to claim credits and reliefs such as:

 

Claiming your tax refund

There are many reasons you may be due tax back as a PAYE employee including:

  • you changed jobs during the year

  • you went on maternity leave

  • you were made redundant

  • you work part-time

  • you had medical/dental expenses

  • you or your spouse/civil partner stays at home to look after a dependent, including a child

  • If you worked abroad, you may be due tax back here and abroad

 

You may not even realise when you’re due tax back and a huge number of people don’t claim, leaving1000's of euro with the taxman each year. To find out if you’re owed a refund, you can use our tax refund calculator to get a no-obligation estimate!

 

The benefits of using Taxback.com include:

  • You’ll get a higher refund because our ACCA certified accountants will check for all credits, expenses, and reliefs (you can't rely on the taxman to check for your credits and reliefs)

  • You skip the paperwork and confusing tax rules

  • You have a team of experts who have already processed over ½ a billion euro in refunds and counting

  • Online updates on your refund

  • Fast and smooth step-by-step process

  • Experienced tax accountants

  • No upfront fees and free, no-obligation estimate before you apply

  • Access to 24/7 online chat help

 

For an accurate tax refund estimate or to file your tax return, get started here.

 

 

9. Understanding Important Forms 

 

Note:

As part of the Government PAYE modernisation project, from 1 January 2019 employers will have to report details of their employees' pay, income tax, PRSI and USC to Revenue every time they pay their employees.

As a result, there will be a changes to a number of forms (particularly forms P45 and P60) from January 2019.

These are detailed below.

1. Your P60

Your P60 is an end of year certificate which displays a summary of your annual pay and deductions (including your total PAYE, PRSI, USC and Local Property Tax contributions deducted throughout the year). Your employer must complete and supply you with a P60 at the end of the tax year (or at the latest by the 15th February following the end of the tax year).

However, as a result of the government's PAYE modernisation project, employees will no longer receive a P60 from their employer from January 2020 onwards.

Instead, employees will be able access their end of year statement from Revenue.

 

2. Your P45

In previous years, when an employee left their job, their employer were obliged to provide them with a P45.

This form stated the employee's pay and the tax and PRSI deducted by the employer for the relevant tax year (up to the date the employment was terminated). It was also issued when an employee was granted a career break or passed away.

However, as a result of the PAYE Modernisation project, you will no longer receive a P45 when your employment ends. Instead your employer will enter your leaving date when submitting details of your final pay and deductions to Revenue.

Note:
The Department of Employment Affairs and Social Protection will no longer require a P45 for claims.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

3. Tax Credit Certificate (TCC)

Your Tax Credit Certificate (TCC) is a very important document your employer uses to calculate your tax and USC. Your Tax Credit Certificate lists your tax credits and reliefs for the year. You can view your Tax Credit Certificate and claim any additional tax credits that you may be due on Revenue’s PAYE Anytime and you can also print a copy of your Tax Credit Certificate from the site or request one from Revenue.

If any details on your certificate is wrong, you could end up paying too much or too little PAYE. It lists your tax credits, reliefs for the tax year, and your rate band. Your TCC also displays your USC rates and thresholds.

By examining your TCC you may find some additional tax credits that you’re not getting and can inform your tax office to have it  amended.

 

4. Your Payslip

The Payment of Wages Act 1991 gives all employees a right to a payslip which shows their gross wage and details of all of their deductions. It’s essentially a statement in writing from your employer that outlines your total pay before tax and details of any deductions from your pay. It can be given to you in electronic format or as a hard copy.

 

Terms commonly found on your payslip:

 

PPS Number

Your Personal Public Service Number is a unique reference number used for all dealings with the public service, including social welfare, tax, education, and health services eligibility.

 

PAYE

The amount of tax payable by you to Revenue.

 

PRSI

PRSI contribution is a social insurance contribution normally payable by both you and your employer.

 

Pension Levy (PRD)

You might see PRD on your payslip if you're a public sector employer. This is a tax applied to all public sector employees who have an entitlement to an occupational public sector pension.

 

Pension

Occasionally the term pension can appear twice on your payslip. However, you’ll only be making one pension contribution overall.

 

USC

The Universal Social Charge is a tax payable on gross income. It’s important to note that if you’re a full medical card holder you’re exempt from paying the higher rate of USC.

 

You can read about more payslip terms here.

 

 

5. Forms for Non-PAYE Income

A chargeable person for self-assessment purposes is a person who is chargeable to tax on that person’s own account or on another person’s account in respect of a chargeable period.

 

You're not chargeable person for a tax year where for that year you only have:

  • PAYE income only

  • PAYE income and income from non-PAYE sources (e.g. trading income, rents, dividends, and deposit interest), where:

          a) Net assessable non-PAYE income (including income subject to DIRT) doesn't exceed €5,000 in a year and is taken into account in determining the individual’s tax credits and standard rate cutoff point for PAYE purposes, or

         b) Total gross income from non-PAYE sources (including income subject to DIRT), doesn't exceed €30,000 in a year. This applies even if you have no tax liability on this income because it is covered or largely covered by losses, capital allowances and other reliefs

 

This exception to the general rule does not apply to Company Directors, owning more than 15% of the shareholding in the company. They are obliged to file a tax return Form 11 to the Revenue. Below we have picture the first page of the Form 11:

 

Non-PAYE income includes:

  • Income from a Trade, Profession or Vocation

  • Deposit Interest

  • Irish Rental Income

  • Income from Fees, Covenants, or Distributions (incl. Dividends)

  • Foreign Income

  • Exempt Income (for example, when availing of Rent a Room relief)

  • Annual Payments (for example, maintenance payments)

 

If you’re self-employed or earning non-PAYE income, you need to file a tax return each year. Depending on your circumstances, the correct form will either be Form 11 or Form 12.

 

Form 12

If you earn less than €5,000 of income outside of PAYE, you’ll need to file a Form 12 for the previous year’s earnings.

 

The deadline for filing your Form 12 is 31 October and you’ll need your:

  • Personal details (name, address, date of birth)

  • PPS Number

  • P60

  • Spouse’s P60 (if married and jointly assessed)

  • Details of the other income (rental income, foreign income, etc.)

  • Details of relevant expenses relating to the income

  • Tax Credit Certificate or Details of Tax Credits to be claimed e.g. PAYE credit, personal credit, medical expenses, single parent family credit, etc

 

Form 12 can also be used to claim a range of tax credits, allowances and reliefs including:



Form 11

If your net assessable non-PAYE income is over €5,000 or your total gross income from non-PAYE sources is over €30,000 in a year, you're regarded as a chargeable person for Income tax purposes and you’ll need to register for income tax by completing a Form TR1 (or TR1 (FT)). Once registered, the next step is to file a Form 11 as a ‘chargeable person’ and pay your tax every year for the previous year’s earnings.

If you’re a company director owning more than 15% of the shareholding in the company, you’re also obliged to complete a Revenue Form 11 each year even if all your income is PAYE.

When filling in your Form 11 you’ll need your:

  • Personal details – including name, date of birth and PPS number (self and spouse if applicable)

  • Details of your PAYE Income – this can be found on your P60 or P45. The relevant details will be your gross pay, tax paid, gross pay for USC and USC paid

  • Social Welfare receipts – the total taxable social welfare amounts received during the year

  • Trade/Profession/Vocation – including total income, sales, receipts and a breakdown of your total expenses. An accounts extract is required for each trade or profession you have

  • Details of losses and capital allowances (carried forward or current)

  • Other income (rental income and related expenses, foreign income, deposit interest, dividends, etc.)

  • Directorships

  • Exempt income

  • Maintenance payments

  • Pension contributions

  • Tax Credits, allowances, reliefs and health expenses

  • High income individuals – restriction on specified reliefs

  • Chargeable assets disposed of or acquired

 

You may also have to pay preliminary tax on your Form 11. This is a payment of income tax for the current tax year. Preliminary tax liability can be based on either 90% of your actual tax liability for the current year or 100% of your tax liability for the previous year.

Most people won’t know their liability for the current year and so instead choose to pay 100% of the previous year’s liability, if possible, to guarantee no additional surcharges or interest. So, for example, if your tax liability for 2016 is €10,000, your preliminary tax for 2017 will be €10,000 also. The deadline for both your 2016 tax liability and your 2017 preliminary tax is 31 October 2017.

 

Assets – capital gains, gifts and inheritance

If you’ve had any capital gains or received gifts or inheritance during the year you may need to file separate tax returns for this income. If you also have non-PAYE income to declare, you can include your Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT) liabilities on a Form 11 or Form 12 income tax return.

However, if you don’t have any non-PAYE income, you’ll need to file a CG1 form to declare your CGT liability and a CAT form IT38 for your liabilities relating to acquisition of gifts and inheritance.

 

CG1 form

First page of Form CG1:

If you make a disposal of a capital asset (for example foreign currency, shares or investment property) anytime between 1 January and 30 November, you must pay Capital Gains Tax on it before the 15 December in the same year.

If you make a disposal between 1 December and 31 December, your payment will be due by 31 January of the following year. You're required to file a CG1 Form by 31 October of the year following the year of disposal. The current CGT rate is 33% and it’s payable by the person making the disposal.

Even if you’ve made a loss on your investment, you’re obliged to report it.

It’s important to note that a surcharge for late filing may arise and that penalties and interest may also apply for late payment. The penalty payment due will depend on how late your tax payment is. However, interest is charged at 0.219% of your liability per day.

 

When filing a CG1 form you’ll need details of:

  • Every investment disposal you made throughout the year (including dates and values)

  • Relevant expenses and deductions relating to each investment

  • The value of profit you made from each investment

  • Details of any losses made on your investments (as these can be used to offset your gains)



Capital Acquisitions Tax CAT - Form IT38

If you receive a gift or an inheritance following a bereavement, you may have to pay tax on it. This is known as Capital Acquisitions Tax (CAT). CAT is a tax charged at 33% on the taxable value of a gift or inheritance.

You’ll be required to file a CAT Form IT38 if the total value of gifts/inheritances you receive within any one group is in excess of 80% of the relevant tax free group threshold.  (Form IT38 should be filed in case the individual is not obliged to file Tax return Form 11/Form 12).

 

First page of Form IT38:


 

Tax on all gifts and inheritances with a valuation date in the 12-month period ending 31 August must be paid and filed by 31 October.

Different tax-free thresholds apply depending on the relationship between the disposer (the person giving the benefit) and the beneficiary (the person receiving the benefit). There are also a number of exemptions and reliefs that depend on the type of the gift or inheritance.

For example, if you get a gift or inheritance from your spouse or civil partner, you’re exempt from Capital Acquisitions Tax.


Group thresholds

Group A – threshold €320,000

This applies when the beneficiary of the gift or inheritance is a child of the person giving it. This includes a stepchild, an adopted child or a foster child in certain circumstances.

Group A also applies to parents who take full and complete ownership of an inheritance from their child. This will be exempt from tax if, in the previous 5 years, the child took an inheritance or gift from either parent and it was not exempt from Capital Acquisitions Tax.

If a grandchild is under 18 years of age and takes a gift or inheritance from their grandparent, Group A may apply if the grandchild's parent is deceased.

Group A may apply to a nephew or niece if they worked in the business of the person giving the benefit for the previous 5 years (the so called “Favourite Nephew Relief”) and:

 

  • are a blood relation

  • the gift or inheritance consists of property used in connection with the business, including farming, or shares in the company

  • if the gift or inheritance consists of property then the nephew or niece must work more than 24 hours pw for the disposer at a place where the business is carried on, or for the company if the gift or inheritance is shares. If the business is carried on exclusively by the disposer, their spouse and the nephew or niece then the requirement is that the nephew or niece work more than 15 hours a week

  • the Favourite Nephew Relief doesn’t apply if the benefit is taken under a discretionary trust

 

Group B threshold €32,500

This group applies to:

 

  • Parent (who doesn’t take full and complete ownership of an inheritance)

  • Grandparent

  • Grandchild or great grandchild (aside from the example in Group A)

  • Brother or sister

  • Nephew or niece of the giver

 

Group C threshold €16,250

This applies to any relationship not included in Group A or Group B.

 

To file a Form IT38 you’ll need:

  • all basic personal information about the people giving and receiving the gift or inheritance

  • details of the gift or inheritance

  • details of any previous inheritances received on or after 5 December 1991

  • any other particulars relevant to the assessment of tax

  • and all relevant dates

 

P21

A P21 is a balancing statement which states your total income in a year. It gives a complete breakdown of your tax credits and tax rate band as well as any income tax and USC you have paid during that year. The P21 balancing statement contains details of any underpayments or overpayments of tax for a particular tax year.

A P21 can be useful if you:

  • need to complete a grant or loan application

  • need to claim benefits from the department of social protection

  • think you’ve overpaid income tax or USC

  • want to claim additional tax credits



To apply for a P21 you’ll need to contact Revenue with your:

  • PPS number

  • P60

  • Spouse’s or civil partner’s P60 (if you’re jointly assessed)

 

There are 2 ways to request an End of Year Statement (P21):

  • Submit a tax return Form 12

  • Use the End of Year Statement (P21) facility in PAYE Services

 

When you apply for a refund with agents other than Taxback.com, they will often simply process a P21 balancing statement, however this means you may miss out on important credits and reliefs, so make sure you get a no-obligation estimate from Taxback.com first.

 

P50

If you become unemployed, you may be able to claim an income tax and USC refund using a Form P50.

 

You’ll have to wait a minimum of:

  • 4 weeks from the date you became unemployed before you apply (if you're not receiving Jobseeker’s Benefit);

  • 8 weeks from the date you became unemployed before you apply (if you're receiving Jobseeker’s Benefit);

  • or you can claim immediately if you were on emergency tax

 

To complete a Form P50 you’ll need to give a number of details:

  • Name and address (including Eircode)

  • PPS Number

  • Previous employer’s number

  • Date of cessation of employment

  • Details of any social welfare payments

  • Bank account details

 

Once completed, the form should be sent to Revenue together with your Form P45 (Parts 2 & 3).

 

 

10. Jargon Buster – Important Irish PAYE Tax terms from A-Z

A

Allowable Deductions

Any expenditure that can be deducted from gross income to reduce the amount subject to income tax before calculating how much tax is due. 


Allowable Expenses

Expenses incurred purely for a trade, i.e. incurred ‘wholly and exclusively' for the purposes of the trade. Examples include cost of running vehicles, rent, repairs, and accountancy fees. 

 

Assessable Income

The amount of money considered when calculating tax payments.


Asset

Something with value that you own outright or have an interest in (such as a leasehold).


In general, an asset must be:


- Apparatus used in carrying on a business
- Kept for permanent use in the business
- Functional in the context of a business, not part of the setting in which the business is carried on and not part of the building

 

Audit

Official inspection of your accounts.


AVCs

Additional Voluntary Contributions that can be made to your private pension to build up an additional retirement fund.


B

Beneficiary

The individual who receives benefits from certain acts. For example, the beneficiary could be a person entitled to benefits from a trust property.



Benefit-in-Kind

Benefits-in-Kind are benefits employees or directors have that aren’t included in their salaries. They include things like company cars, private medical insurance or free accommodation.

Most benefits from employment provided in addition to your salary are subject to income tax.

 


Generally, there are two types of benefits that an employee may get in addition to a salary:

1. Benefits-in-kind - benefits that an employee receives that cannot be converted into cash but have a cash value. Examples include provision of accommodation or a company car, or loans given at a special rate.


2. Benefits (other than benefits-in-kind). Examples include vouchers, holidays, payment of an employee's bills and prizes.

 



C

Capital Gain

The profit from the sale of a capital asset. Examples include assets such as land, buildings, and shares.

 

Capital Gains Tax (CGT)

A type of tax levied on the profit from the disposal of a capital asset. Tax on gains that arise on the sale of capital assets, items such as land, buildings, and shares.

Corporate Income Tax

A type of tax levied on the income of corporations, usually imposed at the national level.

 

Creditor

Person or company to whom money is owed.

Cumulative basis

An option of calculating tax under the PAYE system. Its aim is to spread a tax liability evenly over the year. An employer evaluates your tax liability for a particular week or month by calculating the cumulative tax due from 1 January to that date and reducing the liability by the amount of tax previously deducted.

 



D

Deduction (tax)

A reduction in tax obligation from the taxpayer’s gross income. Deductions are removed from taxable income and thus lower tax liability.


Dependant

Individual who relies on another. For example a child or disabled family member.

 

Disposal

Selling, gifting or exchanging an asset.


Dividends

Sum of money regularly paid by a company to shareholders from its profits.

 

DIRT

Deposit Interest Retention Tax deducted at source from interest paid on deposits of Irish residents (e.g. from banks, credit unions, etc.)


Domicile

Permanent home country of a person or the country they live in and have substantial ties with.

 

Double Taxation Treaty

An agreement with two or more countries to reduce how much tax a worker or company must pay, so they don’t pay tax twice on the same income.

 



E


Earned Income

Income derived from paid work.



Effective Tax Rate

Used to describe the average rate at which an individual or corporation is taxed on their taxable income.

 

Emergency Tax

The tax an individual pays when it’s not clear what tax band they should be assigned to. To avoid this, you should give your employer your PPS number, P45 or Tax Credit Certificate.

 

Excise Tax/Duty

A tax on the sale of particular goods.

 



F

Flat Tax

A tax system with a constant marginal rate.


Form P50

A form for the first time you claim for a repayment of income tax and/or USC during unemployment.


Form 12

A form for PAYE employees to declare additional net income up to €5000, for non-residents, or claiming other credits that can’t be claimed through the online PAYE system.


Form 11

This form can be used by PAYE employees to declare additional net non-PAYE income of over €5000. 


Form P2C

Employer Copy of Tax Credits, Standard Rate CutOff Point, Universal Social Charge, and Local Property Tax which should be deducted on behalf of their employees through payroll



G

Gross Income / Pay

The amount of income paid to an employee before any deductions are made.



H

Home Carer Tax Credit

A Home Carer Tax Credit is given to married couples or civil partners where one individual cares for a dependent. The credit is given in the case of those who are jointly assessed for tax. 



Health Expenses

The amount spent on a diagnosis or treatment of medical problems. You may be entitled to a refund of some of the amount you paid for qualifying medical expenses. 


Help-To-Buy Incentive

A scheme introduced in Budget 2017 for first-time-buyers purchasing newly built homes. This is in the form of a refund of income tax and Deposit Interest Retention Tax paid over the previous 4 years.



Home Renovation Incentive

The Home Renovation Incentive (HRI) scheme enables homeowners or landlords to claim tax relief on repairs, renovations or improvement work that is carried out on their main home or rental property by tax-compliant contractors and that is subject to 13.5% VAT. 



I


Income Tax

A tax levied directly on income. 


Inheritance Tax

Inheritance is an asset or something of value which is passed to another person upon someone’s death. If you receive an inheritance following a death, it may be liable to inheritance tax. Depending on the relationship to the deceased you may be exempt from this tax. For example, if you’re a surviving spouse or civil partner receiving inheritance from your deceased spouse then the inheritance is exempt and not liable to the tax. 

 


J

Joint Assessment

This is a basis for tax assessment of a couple in a marriage or civil partnership. This is usually the most favourable basis of tax assessment if you’re married. 



L


Local Property Tax (LPT)

A self-assessed tax paid annually by homeowners on the market value of residential properties. 


M

Med 1

Form for claiming health expenses tax relief.

Med 2

This form is a receipt for dental expenses incurred and it is certified by dental practitioner.



N

Net Income

The total income after any deductions have been made.

Non-cumulative basis

In certain circumstances Revenue may direct your employer to deduct tax on a week 1 or month 1 basis.

Notional Pay

The value of any non-cash benefit or perquisite.



P

PAY As You Earn (PAYE)

A system for paying income tax and other contributions.

 

PAYE Employee

Pay As You Earn is a tax system where the employer calculates and deducts the amount of tax due.


Parking Levy

In Ireland this is a charge on employees for using car parking provided by the employer in designated urban areas.


Pay Related Social Insurance (PRSI)

Most employers and employees (over 16 years of age and under 66) pay social insurance (PRSI) contributions into the National Social Insurance Fund. In general, the payment of social insurance is compulsory. The term 'insurable employment' is used to describe employment that is liable for social insurance contributions. The rate of PRSI in which a person pays depends on your PRSI class.

 

Payslip

A statement given to an employee detailing income earned and relevant deductions such as tax and USC. 

 

Penalties

A tax penalty is sometimes imposed for an underpayment of tax or late filing.

 

Personal Public Service Number (PPSN)

A unique number given to each individual to access social welfare, benefits and information in Ireland. 

 

P21 Balancing Statement

A final statement of your income tax liability for a year.  

 

Personal Tax Credit

A personal tax credit is due to every individual resident in the state. The amount due depends on your personal circumstances; e.g. whether you're married, single, etc.

 

P45

This is a certificate given to employees at the end of their employment with details of gross pay and tax paid for the year to date. 

P60

This is a statement issued to employees at the end of a tax year detailing your income and tax paid. It’s important to keep this as it could help you apply for a potential tax refund. 



Progressive Tax

A tax where the rate increases as the taxable amount increases.


Qualifying exemptions for Capital Gains Tax (CGT)

There are a number of qualifying exemptions from Capital Gains Tax. For example, the first €1,270 of your gain (after deducting losses) is exempt from CGT.



R

Refund (of tax)

A refund or repayment of tax given to the taxpayer if the tax they owe is less than the amount of tax withheld or estimated tax they paid

The average Irish tax refund is €1076.17

GET YOURS NOW

Rent Tax Credit

The rent tax credit in Ireland applies for the years 2011 onwards to individuals who were renting on 7 December 2010. If you weren't renting on 7 December 2010 and you subsequently entered into a rental agreement, you will not be able to claim the Rental Tax Credit.

Revenue

The office of the Revenue Commissioners is the Irish state body responsible for collecting taxes and duties.

 

ROS

Revenue Online System - for enquiries and to view your tax position.



S

Self-Assessment

Calculation of your own tax liability. For example in Ireland, if you’re self-employed you must typically file a tax return each year by 31 October.

 

Separate Taxation

A method of taxing a married couple or a couple in a civil partnership as separate individuals.


Stamp Duty

A tax on the legal recognition of certain written documents.  


State Benefits

Benefits given by the government to assist people in certain circumstances, such as the unemployed, disabled or ill.


Standard Rate CutOff Point

The amount that you can earn before you start to pay the higher rate of tax is known as your standard rate cutoff point (20%). In Ireland you pay tax at the standard rate of tax up to your standard rate cutoff point. Anything over your standard rate cutoff point is taxed at the higher rate of 40%.  


Start Your Own Business Relief

Relief from income tax for long-term unemployed individuals in Ireland to start a business. Under the scheme, qualified applicants get an exemption from income tax up to a maximum of €40,000 per year.

 

T

Tax

Tax is a compulsory contribution levied by the government on items such as employee’s income, business profits, and the cost of goods and services. 

Tax Agent  

A tax agent or tax preparer, like Taxback.com, prepares and files the returns of income on behalf of taxpayers.

 

Tax Authorities

The authority responsible for tax collection.

Taxation at Source

When tax is taken out ofyour income before it’s paid, e.g. by your employer.  


Tax Credits

Sums that can be offset against a tax liability. 

Tax Credit Certificate

In Ireland a Tax Credit Certificate shows an individual’s total tax credits and rate band for a calendar year. 


Tax Evasion

An illegal non-payment or underpayment of tax.  

Taxable Income

The amount of income used to calculate an individual or company’s income tax.  

Tax Pack

Information to assist taxpayers in completing their tax return.

Taxpayer

An individual who is liable to pay tax.

 

Tax Relief

Reduces the amount of income tax due on earned income.

Tax Return

A statement from a taxpayer to the tax authorities with details of income earned and personal circumstances.  

Tax Threshold

The level of income at which an individual starts paying tax or a higher rate of tax.

 

Temporary basis

An employer will use the temporary tax deduction basis if they’ve been given parts 2 and 3 of a current year or preceding year form P45, stating:

 

  • your PPS number

 and

  • that you weren't on the emergency basis and

  • the employer has sent part 3 of the form P45 to Revenue and is waiting for a Tax Credit Certificate from Revenue 



U

Universal Social Charge (USC)

A tax on an individual’s total income that replaced the income and health levies in Ireland. Some income is exempt from this tax.

 


V

Value Added Tax (VAT)

Value-Added Tax (VAT) is a tax on consumer spending. Most goods and services supplied in Ireland are subject to VAT.

 

W

Withholding Tax

Tax deducted at source, for example by an employer.

 


X

X-Rays

X-Rays are included in a list of qualifying health expenses along with doctors and consultants fees, drugs and medicines supplied by a pharmacist and prescribed by a doctor, transport by ambulance, and more. 

 


Y

YTD

‘YTD’ is often found on official documents such as payslips. It simply means year-to-date.


Z

ZZZZ!

If you find tax to be tedious, why not let Taxback.com take the burden from you? Our team of experts can answer any tax questions you have, file your returns for you and they might even be able to get you a tax refund!

Contact us today!

 

 

11. Frequently Asked Questions

 

Overpayment of tax

Q. How do I know if I overpaid or underpaid tax?

A. Tax credits reduce the amount of Irish income tax due in a year. Some tax credits are granted automatically while others need to be claimed. For example, every employee in Ireland is entitled to the PAYE Tax Credit (€1,650 in 2019).

 An overpayment of tax happens when you’ve paid more tax than you were liable for. If you’ve overpaid tax you can get a tax refund from Revenue.


You may have overpaid tax if:

  • You were unemployed

  • You were out of work sick

  • Your tax credits were incorrect

  • You haven’t claimed tax relief for certain expenses

 

An underpayment might occur if you were receiving tax credits or expenses you weren’t entitled to. You may not even know if you’ve paid too little tax but you’re still responsible for paying the difference to Revenue. The easiest way for Revenue to collect the underpayment is to reduce your tax credits by the relevant amount in the following year. Usually, you won’t pay money directly to Revenue.

The best way to ensure your tax affairs are in order is to examine your Tax Credit Certificate (TCC). This will show you the tax credits your employer is deducting from your tax bill. If you find that your tax credits are incorrect you should contact Revenue.

You can also request a Form P21 (PAYE Balancing Statement) at the end of the year. This will give you details of your total income, tax credits, tax reliefs and PAYE tax paid in a particular tax year.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

 

 At work

Q. I started my job 3 years ago but I just noticed that my tax credits have been incorrect (too low) on every payslip since I started. What can I do?

A. If you notice that you haven’t been receiving the correct amount of credits, it’s likely that you’ll be entitled to a tax refund. However, it’s important to note that you must claim your refund within 4 years of the end of the year in which the tax overpayment arose. If you apply after this time you will not receive a refund.

 

Q. I’m starting my first job – how much tax will I be paying?

A. In truth, there are many different types of tax you’ll have to pay and the amount of tax you pay will depend on your earnings. 

 When you start your first job, you should give your employer:

  • Your PPS number and/or

  • Your P45 from your previous employment within the same tax year

This will make it easier for your employer to register your employment as Revenue will issue a Tax Credit Certificate with the correct tax credits and bands. The main benefit is that you can avoid paying a higher rate of tax (Emergency Tax).

 

There are a number of common taxes every employee pays*:

  • Income tax at 20% on the first €35,300 of earnings

  • Income tax at 40% on the balance of earnings

  • PRSI at 4% of gross income

 

USC at

  • First €12,012 at 0.5%

  • Next €7,862 at 2%

  • Next €50,170 at 4.5%

  • Balance at 8%



*Single person figures.

Remember, you may be entitled to some tax credits which can reduce your overall tax liability. For example, every employee in Ireland is entitled to the Personal and PAYE Tax Credits (€1,650 each in 2019).

 

Q. I’m earning minimum wage – what will be my take home pay?

A. The minimum wage for an experonceienced adult worker is €9.80 per hour.

If you’re on minimum wage 5 days a week it’s likely you’ll earn €19k approx. per annum. If you're single and have no other tax considerations (including children, Benefit-in-Kind, etc), it’s likely you’ll pay tax at the below rates:

 

  • Income tax at 20%

  • PRSI at 4% of gross income

 

USC at

            -0.5% of the first €12,012 in income

            -2.5% from €12,013 to €19,874

-4.5% from €19,875 to €20,384

 

At these rates of tax, it’s likely that your take home pay will be approx. €17,500.

 

Q. Tax saver tickets & ‘cycle to work’ scheme – should I bother?

A. If you want to travel to your place of work by bicycle or public transport, it’s worth your while investigating these schemes.

In short, the Cycle to Work Scheme encourages employees to cycle to and from work. Under the scheme, employers pay for bicycles (and relevant equipment) and you pay this back through a salary sacrifice arrangement. You won't be liable for tax, PRSI or USC on this – which means you save a lot of money. The qualifying amount currently is €1,000.

The Taxsaver scheme incentivises people to use public transport (including LUAS, DART, and Dublin Bus) to and from work by offering travel tickets at a reduced expense. The cost of the ticket is deducted directly from your salary and you can save between 31% and 52% on the regular price depending on your ticket type and tax band. You should contact your employer if you're interested in the Taxsaver scheme.

 

Q. I got a bonus at work. Do I need to declare this for tax?

A. Yes, bonuses are taxed in the same way as other forms of PAYE income. So if you earn €32,000pa and receive a bonus of €3,000, you’ll have to pay income tax at 20% on the first €35,300 of your earnings and 40% on the balance. You will also have to pay PRSI and USC on the bonus.

 

Q. I won a competition at work. The prize was €500. Do I need to pay tax on this?

A. Yes, like all cash payments, you need to pay tax on this.

However, if you get a non-cash benefit from your employer to the value of €500 or under, you won’t have to pay tax on this. If the benefit is more than €500 in value, the full value of the benefit is subject to PAYE, USC and PRSI.

 

Q. What should I do if my employer hasn’t sent me a P60/P45?

A. By law, your employer must give you your P60 within 6 weeks of the end of each tax year or, if your employment ends, your P45 payment document. These documents are important as they contain details of your pay and the income tax, PRSI and USC that has been deducted by your employer and paid to Revenue. For example, you’ll need your P45 if you’re changing jobs and want to avoid paying emergency tax. You should ask for these documents if you don’t receive them from your employer.


Q. What are the implications for my tax if I change jobs?

A. If you’re changing your job, (leaving your existing job and starting a new one), there are a number of steps you should take to ensure that your tax is in order. Firstly, whenever you leave a job, you should get a P45 from your employer. When you begin your new job, you’ll need to give this (along with your PPS number) to your new employer in order to avoid emergency tax being deducted from your pay.

 

Once they receive your P45, your employer will then:

  • Notify the tax office that you have changed jobs so that a Tax Credit Certificate (TCC) can be issued for your new job

  • Use your tax credits and standard cut-off point details from your P45 to operate PAYE until they receives a TCC from the tax office

 

Your PPS number will ensure that your combined social welfare contributions are recorded and that your entitlement to benefits is protected for the future.




Tax returns

Q. I’m a PAYE employee and I never file a tax return. Do I need to?

A. If you’re earning additional income (for example through investments or rental income), you’re obliged to file a Form 11 (if you earn more than €5,000 of non PAYE income per year) or a Form 12 (if you earn less than €5000 per year).

If you don’t earn any income other than your usual salary, you’re not obliged to file a tax return. Although it could be in your best interest to do so as you might get a tax refund.

 

Q. How can I find out if I’m due tax back?

A. If you haven't been getting the correct tax credits during the year you may have been over or underpaying tax. You might have overpaid tax if you were unemployed or sick or you haven’t claimed tax relief for certain expenses. By viewing your  Tax Credit Certificate (TCC) or Form P21 you can evaluate the tax credits that your employer deducted from your tax bill. If you overpaid tax you'll be entitled to a tax refund. However, you must claim the refund within 4 years of the end of the year in which the overpayment occurred.

It’s also a possibility that you underpaid tax and must to pay the difference to Revenue. 

 

Q. How long does it take to receive a refund?

A. It takes 2-4 weeks for you to receive the refund.

 

Q. Is there a possibility  I underpaid tax and will have to settle the balance with Revenue?

A. Yes. For example, if you receive tax credits or deductions you're not entitled to during the current year, this will result in an underpayment of tax when reviewing your tax position after year ends.

You’ll be obliged to pay this tax and the underpayment will remain on your tax record with Revenue until it’s paid. Usually Revenue doesn’t take direct payment and the most common form of repayment is to reduce tax credits for the following year. 

 

Q. What happens if I make a mistake on my tax return?

A. If you make a mistake on your tax return, Revenue can impose penalties. So, if you notice an error you should make an unprompted qualifying disclosure to Revenue as soon as possible.

An unprompted qualifying disclosure is information you give to Revenue to clarify details of incomes or gains that have been omitted in error from your tax return. This disclosure must be made before you receive an audit notice or an investigation begins. The benefit of the disclosure is that you can receive a lower penalty, you will not be investigated for prosecution and will not have your settlement details published on the list of tax defaulters.

 

Q. What happens if I miss a tax return deadline?

A. If you miss a tax deadline you’ll be liable to pay penalties and interest on top of your tax liability. The penalty payment due will depend on how late your tax payment is. Meanwhile interest is charged at 0.219% of your liability per day.



Unemployment

Q. I’m unemployed. Do I pay tax on my social welfare payments?

A. Some Social Welfare payments are taxable and some are exempt from tax. Below are details of the most common Social Welfare payments and whether they're subject to income tax or not.

If you’re confused as to whether your social welfare payment is subject to tax, contact your local social welfare office.

 

Not taxable

  • Back to Work Family Dividend

  • Child Benefit

  • Disability Allowance

  • Disablement Gratuity (lump sum payment)

  • Domiciliary Care Allowance

  • Farm Assist

  • Family Income Supplement

  • Fuel Allowance

  • Household Benefits Scheme

  • Jobseeker's Allowance

  • Jobseeker's Benefit (paid to systematic short-term workers)

  • Jobseeker's Transitional payment

  • Pre-Retirement Allowance

  • Supplementary Welfare Allowance

 

 

Taxable

  • Adoptive Benefit

  • Blind Pension

  • Carer’s Allowance

  • Carer’s Benefit

  • Constant Attendance Allowance (payable with Disablement Pension)

  • Deserted Wife’s Benefit

  • Deserted Wife’s Allowance

  • Death Benefit Pension

  • Disablement Pension (taxable except for child increases)

  • Guardian’s Payment (Contributory) (Taxable on child’s income)

  • Health and Safety Benefit

  • Illness Benefit (taxable except for child increases)

  • Invalidity Pension

  • Incapacity Supplement (taxable except for child increases)

  • Injury Benefit (taxable except for child increases)

  • Jobseeker’s Benefit and Short-Term Enterprise Allowance (taxable first €13 per week excluded)

  • Maternity Benefit       

  • One-Parent Family Payment

  • Partial Capacity Benefit

  • Paternity Benefit

  • State Pension (Contributory)

  • State Pension (Non-Contributory)

  • Widow’s, Widower’s or Surviving Civil Partner's (Contributory) Pension

  • Widow’s, Widower’s or Surviving Civil Partner's (Non-Contributory) Pension



Q. Can I claim refunds for medical expenses?

A. Yes, you can claim tax back on a number of medical expenses (including doctor and consultant fees, non-routine dental expenses, transport by ambulance, and drugs and medicines supplied by a pharmacist and prescribed by a doctor, and more) can be claimed at 20% relief. Read more about medical expenses here. 

 

Q. I’ve lost my job! Can I reclaim any tax? If I do reclaim tax, will it affect my claim for social welfare payments?

A. If you become unemployed after employment you may be entitled to a tax refund.

 

The refund value you could receive depends on the amount of:

  • time you were employed

  • tax you paid during the year, and

  • tax credits you have utilised

 

An application for a refund shouldn't affect a social welfare claim. However, you’ll have to wait a minimum of 4 weeks before you make a claim to get your tax back. If you’re in receipt of social welfare payments such as Jobseeker’s Benefit or Illness Benefit, you’ll have to wait 8 weeks before you can apply for your tax back.

 

 

Additional income & the sharing economy

Q. I’m a PAYE employee. I also write a blog in my spare time and earn money from it. Do I pay tax on my blog earnings?

A. Yes! You need to pay tax on all additional earnings – including money received from operating a blog such as adverts and sponsorship.

If the total amount you earn is less than €5000 in a year you’ll need to file a Form 12.

And if you earn more than €5000 in a year, you’ll need to file a Form 11 (in your first year you’ll also need to register as a chargeable person with Revenue by completing a TR1 Form).

If you receive gifts (material items, or services) from companies who are looking for promotion on your blog, you may need to declare this for tax purposes too. If the value of the gifts given by a single person/company is more than €3,000, then there is a tax implication and you must pay the due tax.

 

Q. I top up my annual income by renting out my spare bedroom on Airbnb. Do I need to pay tax on this? How?

A. Airbnb is one of the most popular options for Irish people looking to make some extra cash. However, tax is still due on the income. The frequency of bookings does make a difference to the type of tax you’ll have to pay - either Case I ‘trading’ income or Case IV ‘miscellaneous’ income.

The form that you complete depends on whether Revenue considers your earnings to be Case I ‘trading’ income or Case IV ‘miscellaneous’ income.

Revenue will likely consider your income as Case I ‘trading’ if:

  • you rent out the room or property on 6 or more occasions annually
  • or if you host for 30 or more nights in a year
  • or your Airbnb income exceeds €5,000 in a year
  • or the property is available for occupancy all the time

 

If your Airbnb business falls under Case I ‘trading’ income then you’ll first need to register with Revenue by completing a TR 1 form. The next step will be to file a Form 11 tax return each year. You should complete a Form 12 if your Airbnb income is less than €5000 in one year as the income is not coded into your tax credit.

It’s not all bad news though. There are a number of deductibles that you can use to significantly reduce your Airbnb tax bill.

The good news is that you’ll be able to expense repair and maintenance costs, including those listed below:

  • replacing broken windows and locks,
  • servicing boilers
  • Supplying new furnishings and fittings
  • Purchased cleaning supplies
  • Don’t forget to include laundry costs!

And

  • legal and accounting fees
  • advertising
  • local sevrice charges

And more!

 

Q. Can I claim rent-a-room relief for my Airbnb income?

A. No rent-a-room relief isn't applicable for Airbnb income.

 

Q. Is there anything I can expense from my Airbnb income?

A. Yes, there are a number of expenses (including repairs, maintenance, and utilities costs) which can reduce your tax liability. Although all expenses must have been incurred ‘wholly’ and ‘exclusively’ from running your Airbnb accommodation. If only part of the cost is associated with your Airbnb trade, then you can only expense the appropriate amount and not the entire expense. 

Read our blog about expenses for your Airbnb and rental income here.

 

Q. Do I have to pay Preliminary Tax for next year’s additional earnings?

A. If you earn income outside of the PAYE system you'll be regarded as a chargeable person and must file tax return and pay tax.

When filing a tax return you’re paying tax on the previous year’s earnings. However, you must also pay Preliminary Tax on income from the current year (i.e. preliminary tax on income earned in 2019 is paid in October 2019 along with income tax due from 2018).

 

To avoid interest charges, you must pay an amount of preliminary tax that is at least one of the following:

  • 90% of the tax due for that year

  • 100% of the tax due for the preceding year

  • 105% of the tax due for the pre-preceding year (this option only applies where you pay by direct debit - it doesn’t apply if the tax due for the pre-preceding year was nil)

 

Q. I’m a PAYE employee but I earn a small amount of cash from my band with 4 others. We pool this money in a bank account and use it to pay the cost of new equipment, recording studio time and transportation. Do we have to pay tax on what we earn? And If so, who in the band should pay it?

A. All members of the band should pay their portion of tax on the net income after the relevant expense deductions. A partnership should be put in place. There are various types of partnerships, but all pay income tax in the same way. Taxes are paid through the personal income tax filings of individual partners.

 

Q. I want to rent a room in my house to my son. Will I have to pay tax on this income?

A. Yes, you must declare all rental income for tax purposes.

 

 

Leaving Ireland and coming home

Q. Later this year I’m emigrating to America. What do I need to do to wrap up my Irish tax affairs?

A. If you’re leaving Ireland permanently or longterm you should ensure your tax affairs are in order! If you’re moving abroad and resident in Ireland in the year of departure and non-resident the next year, you can claim 'Split-Year treatment' relief on employment income in the year of departure.

This means you'll continue to be treated as resident up to the date of departure. All your employment income up to that date will be taxed in the normal way and your employment income from the date of departure is ignored for Irish tax purposes.

Generally, full tax credits are allowable on a 'cumulative basis' which means you receive a full year of tax credits even though you have been resident here for only part of the year. With this in mind, you may also be entitled to a tax refund before you leave. For example, if you leave your employment in July, you may have overpaid tax as five months of your tax credits were never applied.

 

Q. Do I need a new PPS number after I return to Ireland?

A. No, your PPS number is unique to you. You’ll use the same PPS number when you return home as you did before you left.

 

 

Buying a house

Q. I’m about to buy a house. What tax will I need to pay on the purchase?

A. When you buy a house, a number of taxes are due.

For starters, stamp duty is levied by the government for changing documents that specify who owns a property. The tax is calculated at 1% of the selling price of any property up to €1m. For properties worth more than €1m, the liability rises to 2%. All buyers, including first-time buyers, are subject to the same rate. So, if you buy a house worth €240k, you'll pay stamp duty of €2,400. A single rate of 2% applies to all non-residential properties.

Stamp duty is not part of your mortgage and you should save a separate amount to pay for it.

You'll also need to pay VAT if you’re buying a new house (rather than a second-hand house). However, stamp duty is only charged on the base price of the house and VAT is excluded.

If you own a residential property on the liability date (1 November in the preceding year), you may also have to pay Local Property Tax (LPT). Your Local Property Tax liability is based on the market value brand that applies to your house. The first band covers all properties worth up to €100k. Bands then go up in multiples of €50k. If your property is valued at €1m or lower, the tax due is based on the mid-point of your band.

So for example, if your house is valued at €240k the correct band for you will be €200,001 - €250k. The mid-point of this band is €225,000. The amount of tax you pay is 0.18% of your band mid-point (0.18% of €225k = €405). For properties valued over €1m, tax is charged at 0.25% on the balance over €1m with no banding applied.

 

There are some exemptions including:

  • Properties purchased in 2013 (exempt until the end of 2019 if used as your sole or main residence between 2013 and 2019)

  • New and previously unused properties purchased from a builder or developer between 1 January 2013 and 31 October 2019 (exempt until the end of 2019 even if sold again in that period)

  • Certain properties situated in unfinished housing estates

 

Q. Are there any tax reliefs available for someone buying their first home?

A. Yes! First-time buyers of new homes may be entitled to an income tax rebate of up to €20,000, to fund their deposit under the Help-to-Buy (HTB) scheme. When you buy or build your home, the incentive will give you a refund of income tax and any Deposit Interest Retention Tax (DIRT) you paid in Ireland over the previous 4 years.

 

To claim this relief you must:

  • be a first-time buyer

  • buy or build a new property between 19 July 2016 and 31 December 2019

  • live in the property as your main home for five years after you buy or build it

  • be tax compliant, if you're self assessed you must also have tax clearance

  • purchase from a contractor who has been approved by Revenue

  • purchase a home worth €500k or less (if purchased after 1 January 2017)

  • take out a mortgage which is at least 70% of the value of the property.

 

The amount that you can claim is the lesser of:

  • €20,000

  • 5% of the purchase price of a new home or for self-builds this is 5% of the completion value of the property

  • the amount of Income Tax and Deposit Interest Retention Tax (DIRT) you paid in the four years before your purchase or self-build

 

The maximum payment is €20,000 per property regardless of how many people enter into a contract to buy a house. If the Help to Buy (HTB) scheme is not for you, you may be able to claim the First Time Buyers' (FTB) Relief. This is an application for a DIRT refund which you can make when you purchase or self-build your first home or apartment to live in.

 

To avail of the refund these conditions must be met:

  • You must be a first-time buyer of a house or apartment who purchases or self-builds a property between 14 October 2014 and 31 December 2017

  • If the property is self-built it must be suitable to live in immediately, and you must register the land in your name before 31 December 2017

  • The property must be occupied as your principal private residence

  • You may not claim a refund of DIRT under both First Time Buyers' Relief (FTB) and the Help to Buy Incentive (HTB)

  • You can claim DIRT deducted in the 48 months prior to the purchase date for refund

 

This refund is limited to the DIRT paid on savings up to a maximum of:

  • 20% of the purchase price of the house or apartment

  • 20% of the completion value of the property for self builds

 

Q. Are there different types of tax to pay depending on whether you’re buying an apartment or house?

A. No. Stamp duty and Local Property Tax still apply if you're buying an apartment rather than a house.

 

Students

Q. I’m a college student with a part time job. Are there any tax reliefs available for me?

A. There are no tax reliefs available specifically for students with a part-time job. However, you can claim tax relief on tuition and student contribution fees paid for approved Third Level, Foreign Languages, and Informational Technology courses. You may also claim flat rate expenses depending on the type of part time job you have.

 

Q. Are there any tax exemptions for purchasing the books and equipment I need for college?

A. There are no specific tax reliefs for the purchase of books and equipment for college. However, students may be able to claim relief on fees paid for approved courses.

 

Q. What kind of colleges and courses allow me to be eligible for tax relief?

A. All below courses are approved for tax relief.

  • Courses by publicly funded universities, colleges and institutes of higher education in Ireland

  • Courses by publicly funded or duly accredited universities and institutions in other European Union (EU) Member States

  • Courses by colleges or institutions in other EU Member States that provide distance education in Ireland (must be approved for the higher education grants scheme, and include the Open University)

 

 

Artist’s exemption

Q. Who can claim an Artist’s Exemption?

A. Under certain circumstances, income earned by writers, composers, visual artists and sculptors from the sale of their works can be exempt from tax in Ireland. To qualify for an exemption, each piece of work must be deemed by Revenue to be ‘original’ and ‘creative’ works. The maximum amount of income that can be exempted is €50k. However, the income is subject to USC

 

Q. I’m a journalist and I write original feature articles for a weekly column in the newspaper. Can I claim Artist’s Exemption on my income? If not, can I later claim the exemption if I release the articles as a book?

A. No, a journalist can’t claim artist’s exemption for their ordinary income earned through a column in a newspaper. However, a journalist can claim relief if they publish a book of their articles (connected by a common theme) which is original, creative and offers cultural or artistic merit.

 

Q. Does Artist’s Exemption include the provision for tax relief on necessary equipment (paint, brushes, computers, tools etc.) for my work?

A. No, there's no specific tax relief offered to artists who buy equipment for their works. The scheme offers tax exemption on the first €50k of qualifying income.




Gifts and Capital Gains Tax

Q. I’m thinking of investing in some shares. Will I have to pay additional tax if I do?

A. Yes, you’ll have to pay Capital Gains Tax at 33% on any gain you make from your investment.

 

Q. If I hang on to my shares for a few years when will I have to pay tax?

A. Capital Gains Tax is due the year you make the disposal (sale or exchange). So, if you make a disposal anytime between 1 January and 30 November, you must file and pay before the 15 December. If you make a disposal between 1 December and 31 December, your payment is due by 31 January of the following year.

 

Q. I just received a cash gift from a friend. Does anyone need to pay tax on this gift? I intend to re-gift to another friend of mine. Does anyone need to pay tax on this gift?

A. Depending on the size of the cash gift, you may need to pay Capital Acquisitions Tax (CAT). This is a tax at 33%, on gifts and inheritances. If the gift or inheritance is from your spouse/civil partner or if its value is below a group threshold amount, no CAT is due. Also, you can receive a gift with a value of €3,000 or less from any one person in any one year without a CAT liability.

Anyone who receives a gift or inheritance will need to pay CAT if it's above the group threshold amount. Read more about CAT here. 

 

Q. Will anyone notice if I don’t pay Capital Gains Tax?

A. If Revenue discovers a missed or late payment of Capital Gains Tax, you’ll be liable for penalties and interest.

 

 

Marriage

Q. I’m getting married. What are the benefits of being jointly assessed or separately assessed?

A. Getting married and being jointly assessed can be beneficial for tax reasons in certain circumstances. It’s particularly beneficial in a situation where either one party is not working or is in a job where their full income tax bands are not used.

The Home Carer’s Tax Credit is another potential benefit of a marriage or civil partnership where one partner stays at home. The credit is worth €1,500 and to qualify, you must be a married couple/in a civil partnership and jointly assessed for tax. One person must stay in the home caring for a dependent person, typically a child, where their income is less than €7,200 (or €5,080 for years up to and including 2015) a year. 

 

Q. Is it possible to be jointly assessed with someone even if we’re not getting married?

A. No. To be jointly assessed you must be married or in a civil partnership.

 

Q. When I’m married, can I change my mind and switch between separate and joint assessment?

A. Yes. If you get married and become jointly assessed, it’s possible to switch back to separate assessment.

 

Q. Does getting married ‘make sense’ for tax reasons?

A. The main tax benefit of getting married typically arises when one partner isn't working or is in a job where their full income tax bands aren't used.

 

Q. What happens to my tax if I get divorced?

A. This depends on how you were taxed in the year you separated. If you were assessed as single persons there will be no change in your tax assessment. If you were taxed under separate assessment, your income up to the date of separation is assessed in the usual way and you can transfer any unused tax credits and rate bands between partners.

For the remainder of the tax year after separation each spouse will be treated as a single person and the single person’s tax credit applies to their income. If your tax was assessed under joint assessment, one spouse (the assessable spouse) is accountable for tax purposes. The assessable spouse is entitled to the married person’s tax credit and double rate bands for the full year in which you separate.

The assessable spouse is taxed on their own income for the full year as well as the spouse’s income for the year up until the date of separation.

The non-assessable spouse will be taxed on their own income from the date of separation. They’re entitled to the full single person’s tax credit and taxed under the single rate bands. Depending on their circumstances, separated/divorced spouses may choose to be taxed either as a married couple or as single persons after the year in which they separate. The payment of maintenance and the type of maintenance payments are important in deciding which tax arrangement will apply.



Miscellaneous

Q. I have bought clothes online from a shop in America. Do I need to pay Irish tax on this purchase?

A. It’s possible to buy clothes from outside the EU up to a value of €22 without incurring any VAT charges. And goods up to a value of €150 may be imported without payment of customs duty.

If your goods are worth more that these values, VAT is calculated at a standard rate of 23% and Customs Duty at a standard rate of 2.5% on non-commercial goods.

 

Final Thoughts

It's clear that many of us are missing out on reliefs and credits, resulting in an overpayment of tax, simply because we don't realise that we are owed this money! One of the easiest ways to find out exactly what you're owed from the last 4 years is to apply for a free, no-obligation refund estimate from our team at Taxback.com. 

You may be due tax back if you're a PAYE taxpayer if:

  • You worked full or part time in Ireland

 

  • You changed jobs during the tax year

 

  • You left or arrived in Ireland during the tax year

 

  • You pay for your own health and insurance expenses

 

  • You were renting in Dec 2010

 

  • You were made redundant

 

  • Your circumstance changed, e.g. you got married

 

  • You or your spouse/civil partner work in the home with children or other dependend relative

 

  • You have special dietary requirements

 

Email info@taxback.com or use our online calculator to estimate your refund here.

 

The average Irish tax refund is €1076.17

GET YOURS NOW

About The Author

Ciara Kennedy - Digital Content Writer @ Taxback.com

Ciara is our Digital Content Writer at Taxback.com. Since graduating in Journalism and Visual media, Ciara has worked in online marketing in Ireland and Australia and loves writing in all its forms.

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